0001842356-23-000045 | 10-Q | XBRL Viewer

Fair Value Measurements

9 Months Ended

Sep. 30, 2023

The following tables provide information about the Company’s financial instruments that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques utilized to determine such values as of September 30, 2023 and December 31, 2022:


	September 30, 2023
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Cash equivalents:
Money market funds	$	13,797	$	—	$	—	$	13,797
Total cash equivalents	13,797		—		—		13,797
Total assets at fair value	$	13,797	$	—	$	—	$	13,797


	December 31, 2022
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Cash equivalents:
Money market funds	$	31,690	$	—	$	—	$	31,690
Total cash equivalents	31,690		—		—		31,690
Total assets at fair value	$	31,690	$	—	$	—	$	31,690

The Company’s money market funds were valued using Level 1 inputs because they were valued using quoted prices in active markets. As of September 30, 2023 and December 31, 2022, the Company’s cash equivalents approximated their estimated fair value. As such, there are no unrealized gains or losses related to the Company’s cash equivalents.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Acquisitions - Schedule of Estimated Useful Lives of Acquired Intangible Assets (Details) - DFA $ in Thousands	Jan. 05, 2023 USD ($)
Business Acquisition, Contingent Consideration [Line Items]
Total intangible assets	$ 5,950
Developed technology and website content
Business Acquisition, Contingent Consideration [Line Items]
Total intangible assets	$ 1,950
Estimated Useful Life	5 years
Strategic customer relationships and subscriber lists
Business Acquisition, Contingent Consideration [Line Items]
Total intangible assets	$ 3,600
Estimated Useful Life	8 years
Trademarks
Business Acquisition, Contingent Consideration [Line Items]
Total intangible assets	$ 400
Estimated Useful Life	10 years

Long-Term Debt - Schedule of Future Minimum Payments (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Debt Disclosure [Abstract]
2023	$ 357
2024	1,751
2025	30,227
Total principal payments	$ 32,335

Business Combination with CHW - Summary of Earnout Inputs and Valuation Techniques (Details)	Sep. 30, 2023
Stock Price
Business Acquisition [Line Items]
Earnout Shares Measurement Input	8.28
Dividend Yield
Business Acquisition [Line Items]
Earnout Shares Measurement Input	0
Volatility
Business Acquisition [Line Items]
Earnout Shares Measurement Input	0.4400
Risk-Free Interest Rate
Business Acquisition [Line Items]
Earnout Shares Measurement Input	0.0320
Expected Term
Business Acquisition [Line Items]
Earnout Shares Measurement Input	3

Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill recorded in connection with the Company’s acquisitions is primarily attributable to the assembled workforce and anticipated operational synergies. Goodwill is reviewed for impairment at least annually, absent any interim indicators of impairment. Goodwill was $4.6 million and $1.5 million as of September 30, 2023 and December 31, 2022, respectively. The increase in goodwill during the nine months ended September 30, 2023 was due to the acquisitions of businesses during 2023 as further discussed in Note 14, Acquisitions.

The gross carrying amounts and accumulated amortization of the Company’s intangible assets with determinable lives as of September 30, 2023 and December 31, 2022 were as follows:


	September 30, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in thousands)
Finite-lived intangible assets:
Customer relationships and licenses	$	7,686	$	(1,268)	$	6,418
Developed technology	1,073		(415)		658
Trademarks	1,052		(141)		911
Pharmacy board licenses	5		(5)		—
Total finite-lived intangible assets	9,816		(1,829)		7,987
Indefinite-lived intangible assets	49		—		49
Total intangible assets	$	9,865	$	(1,829)	$	8,036


	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in thousands)
Finite-lived intangible assets:
Customer relationships and licenses	$	2,166	$	(422)	$	1,744
Developed technology	783		(226)		557
Trademarks	291		(56)		235
Pharmacy board licenses	5		—		5
Total finite-lived intangible assets	3,245		(704)		2,541
Indefinite-lived intangible assets	49		—		49
Total intangible assets	$	3,294	$	(704)	$	2,590

Amortization expense related to customer relationships and licenses, developed technology, trademarks, and pharmacy board licenses is recorded in depreciation and amortization within the Company’s condensed consolidated statements of operations. Amortization expense of intangible assets with determinable lives was $0.4 million and $0.1 million for the three months ended September 30, 2023 and 2022, respectively, and $1.1 million and $0.4 million for the nine months ended September 30, 2023 and 2022, respectively.

Acquisitions - Narrative (Details) - USD ($)				3 Months Ended
Acquisitions - Narrative (Details) - USD ($)	Apr. 06, 2023	Jan. 05, 2023	Aug. 03, 2021	Mar. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
CPI
Business Acquisition, Contingent Consideration [Line Items]
Cash consideration			$ 3,500,000
Common stock consideration			$ 200,000
Common stock consideration (in shares)			639,000
Cash consideration			$ 1,500,000
Deferred purchase consideration			$ 2,000,000
Payment period			3 years
Liabilities accrued					$ 700,000	$ 1,200,000
DFA
Business Acquisition, Contingent Consideration [Line Items]
Cash consideration		$ 9,000,000
Cash consideration		8,100,000
Amount deposited into an escrow account		900,000
Working capital		0
Transaction-related costs				$ 100,000
Fair value		$ 5,950,000
Maxbone
Business Acquisition, Contingent Consideration [Line Items]
Cash consideration	$ 500,000
Common stock consideration	$ 200,000
Common stock consideration (in shares)	100,000
Fair value	$ 200,000
Consideration issued	100,000
Considered remaining	$ 100,000

Business Combination with CHW

9 Months Ended

Sep. 30, 2023

Business Combination And Reverse Recapitalization [Abstract]

Business Combination with CHW

As described in Note 1, Organization and Description of Business, the Merger with CHW was consummated on August 9, 2022. The CHW Business Combination was accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America. Under this method of accounting, CHW was treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the CHW Business Combination was treated as the equivalent of Wag! issuing shares for the net assets of CHW, accompanied by a recapitalization. The shares and net earnings (loss) per common share prior to the Merger have been retroactively restated as shares reflecting the exchange ratio established in the Merger (0.97 shares of the Company’s common stock for each share of Legacy Wag! common stock). The net assets of CHW have been recognized at carrying value, with no goodwill or other intangible assets recorded. Wag! accounted for the acquisition of CHW based on the amount of net assets acquired upon consummation.

Wag! has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

•Wag!’s shareholders have a majority of the voting power of the Post-Combination Company;

•Wag! appointed the majority of the board of directors of the Post-Combination Company;

•Wag!’s existing management comprises the management of the Post-Combination Company;

•Wag! comprises the ongoing operations of the Post-Combination Company; and

•Wag! is the larger entity based on historical revenue and has the larger employee base.

In connection with the Special Meeting and the CHW Business Combination, the holders of 9,593,970 shares of CHW’s ordinary shares, par value $0.0001 per share, exercised their right to redeem their shares for cash at a redemption price of approximately $10.00 per share, for an aggregate redemption amount of $95,939,700. As a result, the Company received approximately $29.1 million, of which $23.9 million was placed in escrow (and classified as Restricted Cash) in accordance with the Forward Share Purchase Agreements (see section below titled “Forward Share Purchase Agreements” for additional information). As of the date of the Merger, the Company also entered into a financing arrangement Blue Torch Finance, LLC and received net proceeds of $29.4 million from a Secured Note (see Note 8, Long-Term Debt, for additional information). Additionally, the Company received $5 million from a PIPE and Backstop Investor as a result of the agreement entered into by CHW with the PIPE and Backstop Investor party on February 2, 2022 that closed immediately prior to the Merger.

Upon the consummation of the Merger, the following transactions occurred (the “Conversion”):

i.all outstanding shares of Legacy Wag!’s preferred stock, except for Legacy Wag! Series P Shares (as described in part (vi) below), were converted into shares of the Company’s common stock, par value $0.0001 per share, at the then-effective conversion rate as calculated pursuant to the CHW Business Combination Agreement;

ii.the cancellation of each issued and outstanding share of Legacy Wag!’s common stock and the conversion into the right to receive a number of shares of the Company’s common stock equal to the exchange ratio of 0.97 shares of the Company’s common stock for each share of Legacy Wag! common stock;

iii.the conversion of 91,130 warrants issued and outstanding by Legacy Wag! in 2017 to two lenders (the “Legacy Wag! Common Warrants”) into warrants exercisable for shares of the Company’s common stock with the same terms except for the number of shares exercisable and the exercise price, each of which were adjusted using an exchange ratio of 0.97 for Legacy Wag! Common Warrants (further described in Note 10, Redeemable Preferred Stock and Stockholders’ Deficit);

iv.the conversion of all outstanding vested and unvested options to purchase shares of Legacy Wag! common stock (the “Legacy Wag! Options”) into options exercisable for shares of the Company’s common stock with the same terms and conditions as were applicable to the Legacy Wag! Options immediately prior to the Conversion, except for the number of shares exercisable and the exercise price, each of which were adjusted using the exchange ratio of 0.97 for Legacy Wag! Options;

v.the conversion of the outstanding restricted stock unit award covering shares of Legacy Wag! common stock (each, a “Legacy Wag! RSU Award”) into awards covering a number of shares of Wag! common stock (rounded down to the nearest whole number) with the same terms and conditions as were applicable to the Legacy Wag! RSU Awards immediately prior to the Conversion, except for the number of shares subject to the award, which was adjusted using the exchange ratio of 0.97 for Legacy Wag! RSU Awards;

vi.the conversion of 1,100,000 shares of Legacy Wag! Series P Shares into the Company’s common stock on a one-for-one basis;

vii.the issuance and sale of 500,000 CHW ordinary shares for a purchase price of $10.00 per share and an aggregate purchase price of $5,000,000 immediately prior to or substantially concurrently with the Merger Date;

viii.immediately prior to the Effective Time, each CHW ordinary share (including any Sponsor Shares (as defined below) not forfeited) was converted into shares of the Company’s common stock;

ix.the cancellation of 13,327 founder shares held by the Sponsor in accordance with the terms of the CHW Founders Stock Letter (as defined below) and the CHW Business Combination Agreement;

x.the issuance of 300,000 Wag! Community Shares (“Community Shares”) that the Company may distribute to members of the pet wellness and welfare community as identified by our officers and directors; and

xi.the cancellation of 20,000 founder shares held by Sponsor in connection with the CHW Business Combination and in accordance with the CHW Founders Stock Letter and the CHW Business Combination Agreement.

Forward Share Purchase Agreements

Simultaneously with the closing of the CHW Business Combination, the Company deposited $24.7 million into an escrow account pursuant to Forward Share Purchase Agreements (“FPAs”) entered into by CHW on August 5, 2022. In accordance with the FPAs, on the date of the purchase by the Company of the Investor Shares (“Put Date”), the participating investors could elect to sell and transfer to the Company, and the Company would purchase, in the aggregate, up to 2,393,378 shares of common stock of the Company, consisting of shares of common stock then held by the Investors and not sold and repurchased by the Investor since the Merger Date. In conjunction with the sale of the Investor Shares to the Company, each Investor was obligated to notify the Company and the Escrow Agent in writing five business days prior to the Put Date whether or not such Investor was exercising its right to sell the Investor Shares that such Investor held to the Company pursuant to the FPAs (each, a “Shares Sale Notice”). If a Shares Sale Notice was timely delivered by an Investor to the Company and the Escrow Agent, the Company was obligated to purchase from such Investor the Investor Shares held by such Investor on the Put Date. If the Investor sold any Investor Shares in the open market after the Merger Date and prior to Put Date (such sale, the “Early Sale” and such shares, the “Early Sale Shares”), the Escrow Agent would release from the escrow account to the Company an amount equal to $10.30 per Early Sale Share sold in such Early Sale.

The Company’s purchase of the Investor Shares will be made with funds from the escrow account attributed to the Investor Shares. In the event that an Investor sold any Investor Shares in an Early Sale, it was required to provide notice to the Company and the Escrow Agent within three business days of such sale, and the Escrow Agent would release from the escrow account for the Company’s use without restriction an amount equal to the pro rata portion of the escrow attributed to the Investor Shares which the Investor has sold. In the event that the Investor chooses not to sell to the Company any Investor Shares that the Investor owned as of the three-month anniversary of the Merger Date, the Escrow Agent would release all remaining funds from the escrow account for the Company’s use without restriction. The Company accounts for the FPAs as a derivative liability, remeasured to fair value on a recurring basis, with changes in fair value recorded to earnings. For more information, see Note 4, Fair Value Measurements.

On November 1, 2022, the Company entered into an amendment to an FPA (the “Amended Agreement”) for approximately 1.0 million shares. The Amended Agreement modified the date by which such holders may elect to have the Company repurchase their shares to November 23, 2022. No other terms were modified. Effective November 9, 2022, holders of 1.4 million shares subject to Forward Share Purchase Agreements, elected to have the Company repurchase their remaining shares for an aggregate repurchase price of $14.8 million. The remaining investor and holder of 1.0 million shares did not elect to sell its shares to the Company as of the extension date per the Amended Agreement and, as such, the Escrow Agent released the corresponding funds from the escrow account for the Company’s use without restriction in total of $9.8 million.

Financing Agreement

On the Merger Date, the Company entered into a financing agreement with Blue Torch Finance, LLC. See Note 8, Long-Term Debt, for additional information.

Reverse Recapitalization

The following table reconciles the elements of the CHW Business Combination, accounted for as a reverse recapitalization, to the Condensed Consolidated Statements of Cash Flows and the Condensed Consolidated Statements of Stockholders' Deficit for the year ended December 31, 2022):


	Reverse Recapitalization
	(in thousands)
Cash – CHW’s trust (net of redemptions)	$	28,330
Cash – PIPE and Backstop Investor	5,202
Payment of transaction costs and other related expenses	(12,488)
Payment of deferred transaction costs	(9,318)
Proceeds from merger with CHW, net of issuance costs as of the Merger Date	11,726
Reversal of APIC impact recorded upon issuance of Forward Share Purchase Agreements (“FPAs”) in August 2022	(23,203)
Cash received from FPA at Put Date	9,837
APIC impact of FPA at Put Date, net of cash received	4,229
Proceeds from merger with CHW, net of issuance costs as of December 31, 2022	$	2,589


						Number of Shares
						(in thousands)
CHW public shares, prior to redemptions(1)						12,500
Less redemption of CHW shares						(9,594)
CHW public shares, net of redemptions						2,906
Sponsor Shares						3,118
PIPE and Backstop Shares						500
CHW Business Combination and Financing Shares						6,524
Other share activity (Analyst Shares(2), Warrant Exercises)						122
CHW Business Combination, Financing Shares and Other Related Shares						6,646
Legacy Wag! Shares(3)						31,100
Total shares of common stock immediately after CHW Business Combination						37,746

(1) Includes 2,393,378 shares of common stock of the Company subject to the Forward Share Purchase Agreements.

(2) 50,000 shares were issued to Craig-Hallum Capital Group LLC at a price of $4.83 per share.

(3) The number of Legacy Wag! shares was determined from the shares of Legacy Wag! common and preferred stock outstanding immediately prior to the closing of the CHW Business Combination of 30,863,283, which are presented net of the common and preferred stock redeemed, converted at the exchange ratio of approximately 0.97 shares of the Company’s common stock for each share of Legacy Wag! common and preferred stock, with the exception of 1,100,000 Legacy Wag! Series P Shares which converted into the Company’s common stock on a one-for-one basis.

Earnout Compensation

In connection with the CHW Business Combination, Legacy Wag! stockholders and certain members of management and employees of Legacy Wag! that held either a share of common stock, a Legacy Wag! Option or a Legacy Wag! RSU Award (collectively “Eligible Company Equityholders”) at the date of the Merger have the contingent right to Earnout Shares. The aggregate number of Earnout Shares and Management Earnout Shares is 10,000,000 and 5,000,000 shares of Wag! common stock, respectively. The Earnout Shares will be issued following the CHW Business Combination, only if certain Wag! share price conditions are met over a three-year period from the effective Merger Date. The Earnout Shares are subject to the occurrence of certain triggering events based on a three year period from the Merger Date as defined in the CHW Business Combination Agreement as:

1.5,000,000 shares are earned if the stock price of the Company is or exceeds $12.50 for 20 out of any 30 consecutive trading days (“Triggering Event I”)

2.5,000,000 shares are earned if the stock price of the Company is or exceeds $15.00 for 20 out of any 30 consecutive trading days (“Triggering Event II”); and

3.5,000,000 shares are earned if the stock price of the Company is or exceeds $18.00 for 20 out of any 30 consecutive trading days (“Triggering Event III”) (collectively, the “Triggering Events”).

Additionally, if there is a change of control transaction, the agreed upon selling price of the Company on a per share basis, would be the fair value of the shares inclusive of the resulting triggered Earnout Shares upon consummation of the proposed transaction. The per share price in a change in control would be used to determine whether the Triggering Events have been met, and depending on the per share price, a certain number of shares will be issued.

The Earnout Shares and Management Earnout Shares are classified as equity transactions at initial issuance and at settlement when and if the triggering conditions are met. The Earnout Shares are equity-classified since they do not meet the liability classification criteria outlined in ASC 480, Distinguishing Liabilities from Equity, and are both (i) indexed to the Company’s own shares and (ii) meet the criteria for equity classification. Until the shares are issued upon a Triggering Event, the Earnout Shares are not included in shares outstanding. As of the date of the CHW Business Combination, the Earnout Share awards had a total fair value of $23.9 million determined using a Monte Carlo fair value methodology in each of the $12.50, $15.00, and $18.00 Earnout tranches multiplied by the number of Earnout Shares allocated to each individual pursuant to the calculation defined in the CHW Business Combination Agreement. The following table provides a range of assumptions used to determine fair value:


	Stock Price		Dividend Yield		Volatility		Risk-Free Interest Rate		Expected Term
Earnout Shares	$	8.28	—	%	44.00	%	3.20	%	3 years

As a result of the issuance of Community Shares, stock-based compensation expense incurred in connection with the Earnout Shares, and fair value measurement of the FPAs, the Company incurred $39.5 million in transaction-related charges during the three and nine months ended September 30, 2022 in Platform operations and support, Sales and marketing, General and administrative, and Other expense, net within its condensed consolidated statements of operations.

Leases - Narrative (Details) - Phoenix, AZ Office Space $ in Millions	1 Months Ended
	Jun. 30, 2023 USD ($)
Operating Leased Assets [Line Items]
Monthly base rent	$ 0.9
Operating lease term	65 months

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended				9 Months Ended		12 Months Ended
	Sep. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Cash flow from operating activities:
Net loss	$ (2,196)	$ (3,787)	$ (40,931)	$ (2,350)	$ (9,852)	$ (44,371)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation					3,528	24,016
Non-cash interest expense					2,021	224
Depreciation and amortization	414		134		1,170	431
Change in fair value of derivative liability					0	13,708
Issuance of Community Shares					0	1,971
Equity in net earnings of equity method investments	0		0		(553)	0
Other					12	0
Changes in operating assets and liabilities, net of effect of acquired business:
Accounts receivable					(2,573)	(3,698)
Prepaid expenses and other current assets					(463)	(512)
Operating lease right-of-use assets and liabilities					48	19
Other assets					1	0
Accounts payable					2,762	2,662
Accrued expenses and other current liabilities					(452)	1,674
Deferred revenue					(491)	298
Other non-current liabilities					218	0
Net cash used in operating activities					(4,624)	(3,578)
Cash flows from investing activities:
Proceeds from sale and maturity of short-term investments					0	2,550
Cash paid for acquisitions, net of cash acquired					(9,152)	0
Cash paid for equity method investment					(1,470)	0
Purchase of property and equipment					(40)	(36)
Other					0	(562)
Net cash provided by (used in) investing activities					(10,662)	1,952
Cash flows from financing activities:
Proceeds from exercises of stock options					100	0
Proceeds from debt, net of discount					0	29,445
Repayment of debt					(907)	(331)
Proceeds from issuance of Series P preferred stock, net of issuance costs					0	10,925
Proceeds from Business Combination with CHW, net of transaction costs					0	11,485	$ 11,726
Other					(569)	0
Net cash provided by (used in) financing activities					(1,376)	51,524
Net change in cash, cash equivalents, and restricted cash					(16,662)	49,898
Cash, cash equivalents, and restricted cash, beginning of period		$ 38,966		$ 2,845	38,966	2,845	2,845
Cash, cash equivalents, and restricted cash, end of period	$ 22,304		$ 52,743		22,304	52,743	$ 38,966
Supplemental disclosures of cash flow information:
Interest paid					3,724	784
Income taxes paid					23	14
Conversion of preferred stock to common stock					0	121,188
Forward Share Purchase Agreements					$ 0	$ 5,242

Stock-Based Compensation - Schedule of Restricted Stock Activity (Details) - Restricted Stock $ / shares in Units, shares in Thousands, $ in Millions	9 Months Ended
	Sep. 30, 2023 USD ($) $ / shares shares
Number of Shares
Unvested at beginning (in shares) \| shares	4,195
Grants (in shares) \| shares	1,999
Vested (in shares) \| shares	(1,354)
Forfeited (in shares) \| shares	(130)
Unvested at ending (in shares) \| shares	4,710
Weighted-Average Grant Date Fair Value Per Share
Unvested at beginning (in dollars per share) \| $ / shares	$ 2.44
Grants (in dollars per share) \| $ / shares	2.34
Vested (in dollars per share) \| $ / shares	2.45
Forfeited (in dollars per share) \| $ / shares	2.36
Unvested at ending (in dollars per share) \| $ / shares	$ 2.39
Unrecognized expense related to unvested restricted stock \| $	$ 10.7
Stock compensation expense expected to be recognized over a weighted average period	2 years 3 months 29 days

Leases

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Leases

The Company leases office space under non-cancellable lease agreements which expire between 2023 and 2028. Certain of these arrangements have free rent, escalating rent payment provisions, lease renewal options, and tenant allowances. Rent expense is recognized on a straight-line basis over the noncancellable lease term.

In June 2023, the Company entered into a non-cancellable agreement to lease office space in Phoenix, Arizona to replace its existing office space in Phoenix. The base rent is approximately $0.9 million in the aggregate over the original lease term of 65 months from the commencement date.

As of September 30, 2023, maturities of operating lease liabilities were as follows:


	Amount
	(in thousands)
2023	$	20
2024	414
2025	424
2026	216
2027	175
2028	163

Total lease payments	1,412
Less: imputed interest	(213)
Present value of lease liabilities	$	1,199

As the implicit rate in the Company's leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The Company gives consideration to its existing credit arrangements, term of the lease, total lease payments and adjust for the impacts of collateral, as necessary, when calculating its incremental borrowing rates. The lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise any such options. The weighted-average remaining lease term and the weighted-average discount rate used to calculate the present value of lease liabilities are as follows:


	September 30, 2023		December 31, 2022
Weighted-average remaining lease term	4.0 years		2.3 years
Weighted-average discount rate	7.8	%	8.6	%

Contract Liabilities	9 Months Ended
Contract Liabilities	Sep. 30, 2023
Contract with Customer, Liability [Abstract]
Contract Liabilities	Contract LiabilitiesThe timing of services revenue recognition may differ from the timing of invoicing to or collections from customers. The Company’s contract liabilities balance, which is included in Deferred revenue within the Company’s condensed consolidated balance sheets, is primarily comprised of unredeemed gift cards, prepayments received from consumers for Wag! Premium subscriptions, and certain consumer credits for which the revenue is recognized over time as they are used for services on its platform. The contract liabilities balance was $1.8 million and $2.2 million as of September 30, 2023 and December 31, 2022, respectively. Revenues recognized related to the Company’s contract liabilities as of the beginning of the year was $0.6 million and $0.3 million for the three months ended September 30, 2023 and 2022, respectively, and $1.5 million and $0.8 million for the nine months ended September 30, 2023 and 2022, respectively.

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Debt discount and warranty allocation	$ 5,037	$ 7,008
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	110,000	110,000
Common stock, issued (in shares)	39,238	36,849
Common stock, outstanding (in shares)	39,238	36,849

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Total Stock-Based Compensation Expense by Function

The following table provides information about stock-based compensation expense by financial statement line item:


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(in thousands)
Platform operations and support	$	209	$	2,856	$	815	$	2,874
Sales and marketing	174		2,068		533		2,073
General and administrative	682		18,998		2,180		19,069
Total stock-based compensation expense	$	1,065	$	23,922	$	3,528	$	24,016

Schedule of Option Activity

The following table summarizes the activities for all stock options under the Company’s stock-based compensation plans for the nine months ended September 30, 2023:


	Number of Options Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value(1)
	(in thousands)				(in thousands)
Outstanding as of December 31, 2022	7,194	$	0.40	7.19 years	$	19,292
Granted	—	$	—
Exercised	(986)	$	0.10
Forfeited or expired	(22)	$	2.75
Outstanding as of September 30, 2023	6,186	$	0.45	6.43 years	$	10,051

(1) The intrinsic value is the amount by which the current market value of the underlying stock exceeds the exercise price of the stock awards.

Schedule of Restricted Stock Activity

The following table summarizes the activities for all restricted stock units (“RSUs”) under the Company’s stock-based compensation plans for the nine months ended September 30, 2023:


	Number of Shares	Weighted-Average Grant Date Fair Value Per Share
	(in thousands)
Outstanding and nonvested as of December 31, 2022	4,195	$	2.44
Granted	1,999	$	2.34
Vested	(1,354)	$	2.45
Forfeited	(130)	$	2.36
Outstanding and nonvested as of September 30, 2023	4,710	$	2.39

Significant Accounting Policies - Narrative (Details) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Aug. 09, 2022
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Exchange ratio						0.97
Initial investment		$ 1,500
Royalty	$ 0		$ 0	$ 1,791	$ 0
Minimum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Ratable basis over contractual period				1 month
Maximum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Ratable basis over contractual period				1 year
Limited Liability Equity Method Investment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Outstanding ownership percentage acquired	51.00%			51.00%
Intangible assets acquired	$ 2,200
Recognition of intangible assets acquired	200
New Limited Liability Company
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Ownership percentage		49.00%
Derecognition of royalties payable	$ 1,800

Organization and Description of Business	9 Months Ended
Organization and Description of Business	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Description of Business	Organization and Description of Business Wag! Group Co. (“Wag!,” “Wag,” the “Company,” “we,” or “our”), formerly known as CHW Acquisition Corporation (“CHW”), is incorporated in Delaware with headquarters in San Francisco, California. The Company develops and supports proprietary marketplace technologies available as a website and mobile app (“platform” or “marketplace”) that enable independent pet caregivers (“PCG”) to connect with Pet Parents (“Services”) and third-party service partners to provide a suite of pet wellness services and products (“Wag! Wellness” or “Wellness”), including pet expert advice, pet wellness plans, and a pet insurance comparison tool. The platform allows Pet Parents (also referred to as “end-user(s)”), who require specific pet care services, to make service requests on the platform, which are then fulfilled by PCGs. The Company operates in the United States. On August 9, 2022 (the “Closing Date” or “Merger Date”), Wag! Labs, Inc. (“Legacy Wag!”), CHW , and CHW Merger Sub, Inc. (“Merger Sub”) pursuant to the terms of the Business Combination Agreement and Plan of Merger (the “CHW Business Combination Agreement”) dated February 2, 2022, completed the business combination of Legacy Wag! and CHW which was effected by the merger of Merger Sub with and into Legacy Wag!, with Legacy Wag! surviving the Merger as a wholly owned subsidiary of CHW (the “Merger,” and, together with the other transactions contemplated by the CHW Business Combination Agreement, the “CHW Business Combination”). Upon completion of the Merger on August 9, 2022, following the approval at the extraordinary general meeting of the stockholders of CHW held on July 28, 2022 (the “Special Meeting”), the Company changed its name to Wag! Group Co. (“Post-Combination Company”) and effectively assumed all of CHW’s material operations. Refer to Note 3, Business Combination with CHW, for more information regarding the Merger.

Redeemable Preferred Stock and Stockholders' Equity (Deficit)

9 Months Ended

Sep. 30, 2023

Stockholders' Equity Note [Abstract]

Redeemable Preferred Stock and Stockholders' Equity (Deficit)

Stockholders’ Equity (Deficit)

Accumulated Other Comprehensive Income

There were no changes in accumulated other comprehensive income for the three and nine months ended September 30, 2023 and 2022.

Preferred Stock

On January 28, 2022, Legacy Wag! issued 1.1 million convertible preferred shares (“Series P”) in exchange for $11 million of cash. Series P was issued on substantially similar terms to Legacy Wag!’s other convertible preferred share issuances, except for the Series P convertible share agreement, which contained an adjustment provision that provided for additional shares to be issued based on a formula if the proposed Merger was not completed, as defined in the Company’s Certificate of Incorporation. Upon consummation of the Merger, the Series P shares converted into the Company’s common stock on a one-for-one basis.

In connection with the Merger, all redeemable convertible preferred stock were converted to common stock of the Company. As such, all outstanding shares of Legacy Wag!’s preferred stock, except for Legacy Wag! Series P Shares (as described above), were converted into shares of the Company’s common stock, par value $0.0001 per share, at the then-effective conversion rate of approximately 0.97.

Pursuant to the Company’s Certificate of Incorporation, the Company is authorized to issue 1,000,000 shares of preferred stock having a par value of $0.0001 per share. The Company’s board of directors has the authority to issue preferred stock and to determine the rights, preferences, privileges, and restrictions, including voting rights, of those shares. As of September 30, 2023, no shares of preferred stock were issued and outstanding.

Common Stock Warrants

Legacy Wag! Common Warrants

Prior to January 2019, the Company granted 91,310 warrants to purchase common stock. The weighted average exercise price for the warrants were $1.54, and the term of the warrants were 10 years. The warrants were valued on the date of grant using the Black-Scholes Merton (“Black-Scholes”) option pricing model. Upon consummation of the Merger, these warrants were unexercised at the date of the Merger and, as a result, were adjusted using an exchange ratio of 0.97 for Legacy Wag! Common Warrants. During the quarter ended September 30, 2022, the two Legacy Wag! holders net exercised their warrants on a cashless basis for 72,434 shares.

CHW Public and Private Placement Warrants

Prior to the Merger, CHW issued 12,500,000 of Public Warrants and 4,238,636 of Private Warrants (together, the “Warrants”) in connection with its initial public offering to CHW Acquisition Sponsor, LLC, the sponsor of CHW. After consummation of the Merger on August 9, 2022, the 4,238,636 Private Warrants held by the Sponsor were exchanged for 3,895,564 warrants to purchase shares of common stock of the Company issuable upon the exercise of Private Placement Warrants originally issued to CHW and the 12,500,000 shares of common stock that are issuable upon the exercise of Public Warrants remained outstanding. Each whole warrant entitles the registered holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment, at any time commencing on September 8, 2022, which was the later of 30 days after the completion of the CHW Business Combination or 12 months from CHW's IPO closing date. The Warrants will expire on the fifth anniversary of the CHW Business Combination, or earlier upon redemption or liquidation.

Management has concluded that the Warrants issued pursuant to the CHW's IPO qualify for equity accounting treatment. The Warrants were not subject to revaluation at the Merger Date, and as such, the original valuation performed by CHW in connection with its IPO in September 2021 still applies. The following table provides quantitative information regarding fair value measurements at issuance on September 1, 2021:


	Share Price		Exercise Price		Dividend Yield		Volatility		Risk-Free Interest Rate		Expected Term

CHW Warrants	$	10.00	$	11.50	—	%	22.00	%	1.31	%	5 years

The fair value as of September 1, 2021 was $1.32 per share. As of September 30, 2023, the Company had 12,500,000 of Public Warrants and 3,895,564 of Private Warrants outstanding, respectively.

The Company may call the Warrants for redemption:

•in whole or in part;

•at a price of $0.01 per warrant;

•upon a minimum of 20 days’ prior written notice of redemption; and

•if, and only if, the reported last sale price of the Public Shares equals or exceeds $16.50 per share (as adjusted for share subdivisions, share consolidations, share capitalizations, rights issuances, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date the Company sends the notice of redemption to the warrant holders.

If the Company calls the Warrants for redemption, management will have the option to require all holders that wish to exercise the public warrants to do so on a “cashless basis,” as described in the warrant agreement.

The exercise price and number of shares of common stock issuable upon exercise of the Warrants may be adjusted in certain circumstances including in the event of a share dividend, recapitalization, reorganization, merger or consolidation. However, the Warrants will not be adjusted for issuance of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Warrants.

Acquisitions (Tables)

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Schedule of Purchase Consideration

The preliminary purchase consideration allocation was as follows:


	January 5, 2023
	(in thousands)
Intangible assets	$	5,950
Goodwill	3,050
Total purchase consideration	$	9,000

Schedule of Estimated Useful Lives of Acquired Intangible Assets

The table below summarizes the fair value and the estimated useful lives of the acquired intangible assets:

January 5,
2023

Estimated Useful Life

(in thousands)

Developed technology and website content

1,950

5 years

Strategic customer relationships and subscriber lists

3,600

8 years

Trademarks

400

10 years

Total intangible assets

5,950

Business Combination with CHW - CHW Narrative (Details)					3 Months Ended	9 Months Ended	12 Months Ended
Business Combination with CHW - CHW Narrative (Details)	Nov. 09, 2022 USD ($) shares	Nov. 01, 2022 shares	Aug. 09, 2022 USD ($) Lender tradingDay $ / shares shares	Aug. 05, 2022 USD ($) $ / shares shares	Sep. 30, 2022 USD ($) lender shares	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) $ / shares	Sep. 30, 2023 $ / shares	Jan. 28, 2022
Schedule Of Reverse Recapitalization [Line Items]
Exchange ratio			0.97
Common stock, par value (in dollars per share) \| $ / shares			$ 0.0001				$ 0.0001	$ 0.0001
Net proceeds \| $			$ 29,100,000
Restricted cash \| $			23,900,000
Proceeds from PIPE \| $			$ 5,000,000				$ 5,202,000
Warrants outstanding (in shares)			91,130
Number of lenders			2		2
Cash deposited into escrow \| $				$ 24,700,000
Derivative instrument, contingent consideration, liability, shares (in shares)		1,000,000		2,393,378
Shares purchase price (in dollars per share) \| $ / shares				$ 10.30
Shares subject to repurchasing (in shares)	1,400,000
Stock repurchased \| $	$ 14,800,000
Cash received from FPA at Put Date \| $	$ 9,800,000						$ 9,837,000
Reverse recapitalization, contingent consideration, equity, triggering event period			3 years
Fair value of earnout share awards \| $			$ 23,900,000
Payments of reverse recapitalization transaction costs \| $					$ 39,500,000	$ 39,500,000
Private placement
Schedule Of Reverse Recapitalization [Line Items]
Number of shares issued (in shares)			500,000
Price per share (in dollars per share) \| $ / shares			$ 10.00
Total proceeds \| $			$ 5,000,000
Issuance of Community Shares (in shares)			500,000
Community Share Issuance
Schedule Of Reverse Recapitalization [Line Items]
Issuance of Community Shares (in shares)			300,000
Common Stock
Schedule Of Reverse Recapitalization [Line Items]
Conversion of preferred stock to common stock (in shares)					24,959,000
Issuance of Community Shares (in shares)					300,000
CHW Acquisition Corporation
Schedule Of Reverse Recapitalization [Line Items]
Number of shares redeemed (in shares)			9,593,970
Common stock, par value (in dollars per share) \| $ / shares			$ 0.0001
Redemption price (in dollars per share) \| $ / shares			$ 10.00
Value of shares forfeited \| $			$ 95,939,700
Earnout Shares
Schedule Of Reverse Recapitalization [Line Items]
Reverse recapitalization, contingent consideration, equity, shares (in shares)			10,000,000
Reverse recapitalization, contingent consideration, equity, triggering event period			3 years
Management Earnout Shares
Schedule Of Reverse Recapitalization [Line Items]
Reverse recapitalization, contingent consideration, equity, shares (in shares)			5,000,000
Earnout Consideration Triggering Event, One
Schedule Of Reverse Recapitalization [Line Items]
Reverse recapitalization, contingent consideration, equity, stock price trigger (in dollars per share) \| $ / shares			$ 12.50
Earnout Consideration Triggering Event, One \| Earnout Shares
Schedule Of Reverse Recapitalization [Line Items]
Reverse recapitalization, contingent consideration, equity, shares (in shares)			5,000,000
Reverse recapitalization, contingent consideration, equity, stock price trigger (in dollars per share) \| $ / shares			$ 12.50
Reverse recapitalization, contingent consideration, equity, threshold trading days \| tradingDay			20
Reverse recapitalization, contingent consideration, equity, threshold trading day period \| tradingDay			30
Earnout Consideration Triggering Event, Two
Schedule Of Reverse Recapitalization [Line Items]
Reverse recapitalization, contingent consideration, equity, stock price trigger (in dollars per share) \| $ / shares			$ 15.00
Earnout Consideration Triggering Event, Two \| Earnout Shares
Schedule Of Reverse Recapitalization [Line Items]
Reverse recapitalization, contingent consideration, equity, shares (in shares)			5,000,000
Reverse recapitalization, contingent consideration, equity, stock price trigger (in dollars per share) \| $ / shares			$ 15.00
Reverse recapitalization, contingent consideration, equity, threshold trading days \| tradingDay			20
Reverse recapitalization, contingent consideration, equity, threshold trading day period \| tradingDay			30
Earnout Consideration Triggering Event, Three
Schedule Of Reverse Recapitalization [Line Items]
Reverse recapitalization, contingent consideration, equity, stock price trigger (in dollars per share) \| $ / shares			$ 18.00
Earnout Consideration Triggering Event, Three \| Earnout Shares
Schedule Of Reverse Recapitalization [Line Items]
Reverse recapitalization, contingent consideration, equity, shares (in shares)			5,000,000
Reverse recapitalization, contingent consideration, equity, stock price trigger (in dollars per share) \| $ / shares			$ 18.00
Reverse recapitalization, contingent consideration, equity, threshold trading days \| tradingDay			20
Reverse recapitalization, contingent consideration, equity, threshold trading day period \| tradingDay			30
Series P Redeemable Convertible Preferred Stock
Schedule Of Reverse Recapitalization [Line Items]
Conversion basis			1						1
Series P Redeemable Convertible Preferred Stock \| Common Stock
Schedule Of Reverse Recapitalization [Line Items]
Conversion of preferred stock to common stock (in shares)			1,100,000
Conversion basis			1
Secured Debt \| The Credit Facility
Schedule Of Reverse Recapitalization [Line Items]
Net proceeds \| $			$ 29,400,000
Founder Shares
Schedule Of Reverse Recapitalization [Line Items]
Number of shares cancelled in maximum redemption scenario (in shares)			13,327
Number of shares cancelled in connection with Business Combination (in shares)			20,000

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2023	Nov. 01, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-40764
Entity Registrant Name	Wag! Group Co.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	88-3590180
Entity Address, Address Line One	55 Francisco Street
Entity Address, Address Line Two	Suite 360
Entity Address, City or Town	San Francisco
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94133
City Area Code	707
Local Phone Number	324-4219
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		39,245,262
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Entity Central Index Key	0001842356
Common Stock, par value $0.0001 per share
Document Information [Line Items]
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	PET
Security Exchange Name	NASDAQ
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share
Document Information [Line Items]
Title of 12(b) Security	Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share
Trading Symbol	PETWW
Security Exchange Name	NASDAQ

Business Combination with CHW (Tables)

9 Months Ended

Sep. 30, 2023

Business Combination And Reverse Recapitalization [Abstract]

Schedule of Reverse Recapitalization


	Reverse Recapitalization
	(in thousands)
Cash – CHW’s trust (net of redemptions)	$	28,330
Cash – PIPE and Backstop Investor	5,202
Payment of transaction costs and other related expenses	(12,488)
Payment of deferred transaction costs	(9,318)
Proceeds from merger with CHW, net of issuance costs as of the Merger Date	11,726
Reversal of APIC impact recorded upon issuance of Forward Share Purchase Agreements (“FPAs”) in August 2022	(23,203)
Cash received from FPA at Put Date	9,837
APIC impact of FPA at Put Date, net of cash received	4,229
Proceeds from merger with CHW, net of issuance costs as of December 31, 2022	$	2,589


						Number of Shares
						(in thousands)
CHW public shares, prior to redemptions(1)						12,500
Less redemption of CHW shares						(9,594)
CHW public shares, net of redemptions						2,906
Sponsor Shares						3,118
PIPE and Backstop Shares						500
CHW Business Combination and Financing Shares						6,524
Other share activity (Analyst Shares(2), Warrant Exercises)						122
CHW Business Combination, Financing Shares and Other Related Shares						6,646
Legacy Wag! Shares(3)						31,100
Total shares of common stock immediately after CHW Business Combination						37,746

(1) Includes 2,393,378 shares of common stock of the Company subject to the Forward Share Purchase Agreements.

(2) 50,000 shares were issued to Craig-Hallum Capital Group LLC at a price of $4.83 per share.

Summary of Earnout Inputs and Valuation Techniques

The following table provides a range of assumptions used to determine fair value:


	Stock Price		Dividend Yield		Volatility		Risk-Free Interest Rate		Expected Term
Earnout Shares	$	8.28	—	%	44.00	%	3.20	%	3 years

Fair Value Measurements - Schedule of Financial Assets (Details) - Fair Value, Recurring - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Assets:
Total cash equivalents	$ 13,797	$ 31,690
Total assets at fair value	13,797	31,690
Level 1
Assets:
Total cash equivalents	13,797	31,690
Total assets at fair value	13,797	31,690
Level 2
Assets:
Total cash equivalents	0	0
Total assets at fair value	0	0
Level 3
Assets:
Total cash equivalents	0	0
Total assets at fair value	0	0
Money market funds
Assets:
Total cash equivalents	13,797	31,690
Money market funds \| Level 1
Assets:
Total cash equivalents	13,797	31,690
Money market funds \| Level 2
Assets:
Total cash equivalents	0	0
Money market funds \| Level 3
Assets:
Total cash equivalents	$ 0	$ 0

Revenues

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenues

The following table presents the Company’s revenues disaggregated by offering:


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(in thousands)
Services revenue	$	6,551	$	5,866	$	18,159	$	15,973
Wellness revenue	13,546		9,513		39,426		21,856
Pet food & treats revenue	1,703		—		4,658		—
Total revenues	$	21,800	$	15,379	$	62,243	$	37,829

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
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+ Details

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesThe quarterly income tax provision reflects an estimate of the corresponding quarter’s state taxes in the United States. The provision for income tax expense for the three and nine months ended September 30, 2023 and 2022 was determined based upon estimates of the Company’s annual effective tax rate for the years ending December 31, 2023 and 2022, respectively. Since the Company is in a full valuation allowance position due to losses incurred since inception, the provision for taxes consists solely of certain state income taxes.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
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-Subparagraph (SAB Topic 11.C)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Schedule of Anti-dilutive Securities Excluded from Computation of Diluted Net Loss Per Share

The following participating securities have been excluded from the computation of diluted loss per share for the periods presented because including them would have been anti-dilutive:


	Nine Months Ended
	September 30, 2023	September 30, 2022
	(in thousands)
Earnout Shares	15,000	15,000
Options and RSUs issued and outstanding	10,896	7,420
Warrants issued and outstanding	18,292	18,292
Delayed share issuance related to acquisition	51	—
Total	44,239	40,712

Leases (Tables)

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Schedule of Future Minimum Lease Payments

As of September 30, 2023, maturities of operating lease liabilities were as follows:


	Amount
	(in thousands)
2023	$	20
2024	414
2025	424
2026	216
2027	175
2028	163

Total lease payments	1,412
Less: imputed interest	(213)
Present value of lease liabilities	$	1,199

Summary of Weighted Average Remaining Lease Term and Discount Rate

The weighted-average remaining lease term and the weighted-average discount rate used to calculate the present value of lease liabilities are as follows:


	September 30, 2023		December 31, 2022
Weighted-average remaining lease term	4.0 years		2.3 years
Weighted-average discount rate	7.8	%	8.6	%

Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

The gross carrying amounts and accumulated amortization of the Company’s intangible assets with determinable lives as of September 30, 2023 and December 31, 2022 were as follows:


	September 30, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in thousands)
Finite-lived intangible assets:
Customer relationships and licenses	$	7,686	$	(1,268)	$	6,418
Developed technology	1,073		(415)		658
Trademarks	1,052		(141)		911
Pharmacy board licenses	5		(5)		—
Total finite-lived intangible assets	9,816		(1,829)		7,987
Indefinite-lived intangible assets	49		—		49
Total intangible assets	$	9,865	$	(1,829)	$	8,036


	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in thousands)
Finite-lived intangible assets:
Customer relationships and licenses	$	2,166	$	(422)	$	1,744
Developed technology	783		(226)		557
Trademarks	291		(56)		235
Pharmacy board licenses	5		—		5
Total finite-lived intangible assets	3,245		(704)		2,541
Indefinite-lived intangible assets	49		—		49
Total intangible assets	$	3,294	$	(704)	$	2,590

Schedule of Indefinite-Lived Intangible Assets

The gross carrying amounts and accumulated amortization of the Company’s intangible assets with determinable lives as of September 30, 2023 and December 31, 2022 were as follows:


	September 30, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in thousands)
Finite-lived intangible assets:
Customer relationships and licenses	$	7,686	$	(1,268)	$	6,418
Developed technology	1,073		(415)		658
Trademarks	1,052		(141)		911
Pharmacy board licenses	5		(5)		—
Total finite-lived intangible assets	9,816		(1,829)		7,987
Indefinite-lived intangible assets	49		—		49
Total intangible assets	$	9,865	$	(1,829)	$	8,036


	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in thousands)
Finite-lived intangible assets:
Customer relationships and licenses	$	2,166	$	(422)	$	1,744
Developed technology	783		(226)		557
Trademarks	291		(56)		235
Pharmacy board licenses	5		—		5
Total finite-lived intangible assets	3,245		(704)		2,541
Indefinite-lived intangible assets	49		—		49
Total intangible assets	$	3,294	$	(704)	$	2,590

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Legal and Other Contingencies From time to time, the Company may be a party to litigation and subject to claims, including non-income tax audits, in the ordinary course of business. The Company accrues a liability when management believes information available to it prior to the issuance of the consolidated financial statements indicates it is probable a loss has been incurred as of the date of the consolidated financial statements and the amount of loss can be reasonably estimated. The Company adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Legal costs are expensed as incurred. Although the results of litigation and claims cannot be predicted with certainty, management concluded that there was not a reasonable probability that it had incurred a material loss during the periods presented related to such loss contingencies. Therefore, the Company has not recorded a reserve for any such contingencies. Given the inherent uncertainties and unpredictability of litigation, the ultimate outcome of ongoing matters cannot be predicted with certainty but the Company believes it has valid defenses with respect to the legal matters pending against it. Nevertheless, the consolidated financial statements could be materially adversely affected in a particular period by the resolution of one or more of these contingencies. Regardless of the outcome, litigation can have an adverse impact on the Company because of judgment, defense, and settlement costs, diversion of management resources, and other factors. Liabilities established to provide for contingencies are adjusted as further information develops, circumstances changes, or contingencies are resolved; such changes are recorded in the accompanying statements of operations during the period of the change and reflected in accrued expenses and other current liabilities on the accompanying consolidated balance sheets. The Company has been and continues to be involved in numerous legal proceedings related to PCG classification. In California, Assembly Bill No. 5 (AB-5) implemented a presumption that workers are employees. However, AB-2257 exempts agencies providing referrals for certain animal services, including dog walking, from AB-5. The Company believes that it falls within this exemption. Nevertheless, the interpretation or enforcement of the exemption could change. The United States Department of Labor announced on October 11, 2022 that it would publish a Notice of Proposed Rulemaking regarding the classification of workers as independent contractors or employees. We are monitoring the development of the proposed rule and will evaluate any potential impact of the final rule on our operations. The Company is subject to audits by taxing authorities and other forms of investigation, audit, or inquiry conducted by federal, state, or local governmental agencies. Due to the inherent uncertainties in the final outcome of such matters, the Company can give no assurance that it will prevail in such matters, which could have an adverse effect on the Company’s business. In addition, the Company may be subject to greater risk of legal claims or regulatory actions as it increases and continues its operations in jurisdictions where the laws and regulations governing online marketplaces or the employment classification of service providers who use online marketplaces are uncertain or unfavorable. In November 2019, California issued an assessment alleging various violations and penalties related to alleged misclassification of pet caregivers who use the Company’s platform as independent contractors. The Company has challenged both the legal basis and the amount of the assessment, of $1.7 million in unemployment insurance contributions for our independent contractors. In April 2022, the California Employment Development Department ("CA EDD") initiated a routine employment tax audit of the Company. We are engaged in ongoing discussions with the CA EDD, including providing additional data that has been requested, in order to determine what, if any, additional assessments are warranted. CA EDD alleges the Company owes approximately $1.3 million in unemployment insurance contributions for our independent contractors. In response, we submitted a Petition for Reassessment and intend to defend ourselves vigorously in this pending matter. The Company believes given the inherent uncertainties of litigation, the outcome of this matter is not considered probable nor estimable and, therefore, the Company has not recorded a reserve. In August 2018, the New York State Department of Labor (“DOL”) issued an Investigation Report assessing the Company with approximately $0.2 million in unemployment insurance contributions for our independent contractors. In August 2023, the Company completed payments of $0.4 million to the DOL, which represented the amount of the assessment plus interest and was recognized in general and administrative expenses within the Company’s condensed consolidated statement of operations during the third quarter of 2023. In December 2019, Wag Hotels, Inc. filed a lawsuit against the Company alleging various claims related to breach of contract and trademark infringement. On June 29, 2023, the parties agreed to a settlement amount of $0.5 million to resolve all claims, with an initial payment up front and the remaining payments over 25 months. The settlement was executed on August 30, 2023. The $0.5 million has been recognized in general and administrative expenses within the Company’s condensed consolidated statement of operations during the second quarter of 2023 and the Company has recorded a corresponding liability in Accrued expenses and other current liabilities and Other non-current liabilities within its condensed consolidated balance sheet as of September 30, 2023. As of September 30, 2023, management did not believe that the outcome of pending matters would have a material effect on the Company’s financial position, results of operations, or cash flows.

Significant Accounting Policies	9 Months Ended
Significant Accounting Policies	Sep. 30, 2023
Accounting Policies [Abstract]
Significant Accounting Policies	Significant Accounting Policies Basis of Presentation The unaudited condensed consolidated interim financial information of the Company has been prepared in accordance with Article 10 of the Securities and Exchange Commission’s (“SEC”) Regulation S-X. Accordingly, as permitted by Article 10 of Regulation S-X, it does not include all of the information required by generally accepted accounting principles in the U.S. (“U.S. GAAP”) for complete financial statements. The condensed consolidated balance sheet as of December 31, 2022 was derived from the audited financial statements at that date and does not include all the disclosures required by U.S. GAAP, as permitted by Article 10 of Regulation S-X. The Company’s unaudited condensed consolidated financial statements as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 include Wag! Group Co. and all of its subsidiaries. In the opinion of management, the accompanying financial information contains all adjustments, consisting of normal recurring adjustments, necessary to state fairly the Company’s unaudited condensed consolidated financial statements as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, or the 2022 10-K. Operating results for the three and nine months ended September 30, 2023 and 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The number of shares and per share amounts prior to the Merger have been retroactively restated as shares reflecting conversion at the exchange ratio of 0.97 established in the CHW Business Combination. See Note 3, Business Combination with CHW, for more information regarding the CHW Business Combination. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosures as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on various factors, including historical experience, and on various other assumptions that are believed to be reasonable under the circumstances, when these carrying values are not readily available from other sources. Significant items subject to estimates and assumptions include, but are not limited to, fair values of financial instruments, assumptions used in the valuation of common and preferred stock, valuation of stock-based compensation and warrants, and the valuation allowance for deferred income taxes. Actual results may differ from these estimates. Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU changes the impairment model for most financial assets, requiring the use of an expected loss model which requires entities to estimate the lifetime expected credit loss on financial assets measured at amortized cost. Such credit losses will be recorded as an allowance to offset the amortized cost of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In addition, credit losses relating to available-for-sale debt securities will now be recorded through an allowance for credit losses rather than as a direct write-down to the security. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of this guidance during the first quarter of 2023 did not have a material impact on the Company’s condensed consolidated financial statements. New Accounting Pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). This ASU simplifies the accounting for convertible instruments by eliminating certain accounting models, resulting in fewer embedded conversion features being separately recognized from the host contract, and also amends the guidance for derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. Additionally, the amendments in this ASU affect the diluted EPS calculation for convertible instruments. It requires that the effect of potential share settlement be included in the diluted EPS calculation when a convertible instrument may be settled in cash or shares; the if-converted method as opposed to the treasury stock method is required to calculate diluted EPS for these types of convertible instruments. The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the potential impact of this adoption on its condensed consolidated financial statements. In August 2023, the FASB issued ASU No. 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement (“ASU 2023-05”). This ASU requires a joint venture to recognize and initially measure its assets and liabilities using a new basis of accounting upon formation, i.e. at fair value (with exceptions to fair value measurement that are consistent with the business combinations guidance). The amendments in this update are effective for all newly-formed joint venture entities with a formation date on or after January 1, 2025, with early adoption permitted. Joint ventures formed prior to the adoption date may elect to apply the new guidance retrospectively back to their original formation date. The Company is evaluating the potential impact of this adoption on its condensed consolidated financial statements. Equity Method Investment During the fourth quarter of 2022, the Company’s subsidiary, Compare Pet Insurance Services, Inc. entered into an agreement to invest $1.5 million for 49% ownership in a new limited liability company, which was funded in the first quarter of 2023. The investment was accounted for as an equity method investment, as the Company had less than 50% ownership and did not control the entity. During the nine months ended September 30, 2023, the Company recognized $1.8 million of Royalty expenses within its condensed consolidated statements of operations related to fees payable to the equity method investee. During the third quarter of 2023, the Company acquired the outstanding 51% ownership of the limited liability company for an aggregate purchase price of approximately $2.2 million. The Company accounted for the transaction as an asset acquisition using the cost accumulation model to determine the cost to be allocated to the assets acquired, which resulted in the derecognition of royalties payable to the equity method investee of approximately $1.8 million and the recognition of intangible assets acquired of approximately $0.2 million. As a result of the transaction, the limited liability company became a wholly-owned subsidiary of the Company and the Company began consolidating the entity as part of its condensed consolidated financial statements. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Through its Services offerings, the Company principally generates Services revenue from service fees charged to PCGs to successfully complete a pet care service to a Pet Parent via the platform. The Company also generates revenue from subscription fees paid by Pet Parents for Wag! Premium and fees paid by PCGs to join the platform. Additionally, through its Wellness and Pet Food & Treat offerings, the Company generates revenue through commission fees paid by third-party service partners in the form of ‘revenue-per-action’ or conversion activity defined in our agreements with the respective third-party service partner. For some of the Company’s arrangements with third-party service partners, the transaction price is considered variable, and an estimate of the transaction price is recorded when the action occurs. The estimated transaction price used in the variable consideration is based on historical data with the respective third-party service partner and the consideration is measured and settled monthly. The Company enters into terms of service with PCGs and Pet Parents to use the platform (“Terms of Service Agreements”), as well as an Independent Contractor Agreement (“ICA”) with PCGs (the ICA, together with the Terms of Service Agreements, the “Agreements”). The Agreements govern the fees the Company charges the PCGs and Pet Parents, where applicable, for each transaction. Upon acceptance of a transaction, PCGs agree to perform the services that are requested by a Pet Parent. The acceptance of a transaction request combined with the Agreements establishes enforceable rights and obligations for each transaction. A contract exists between the Company and its customers after both the PCGs and Pet Parent accept a transaction request and the PCGs ability to cancel the transaction lapses. For Wag! Wellness and Pet Food & Treat revenues, the Company enters into agreements with third-party service partners which define the action by a Pet Parent that results in the Company earning and receiving a commission fee from the third-party service partner. Wag!’s service obligations are performed, and revenue is recognized for fees earned related to the facilitation and completion of a pet service transaction between the Pet Parent and the PCG through the use of our platform. Revenue generated from the Company’s Wag! Premium subscription is recognized on a ratable basis over the contractual period, which is generally one month to one year depending on the type of subscription purchased by the Pet Parent. Unused subscription amounts are included in Deferred revenue within the Company’s condensed consolidated balance sheets. Revenue related to the fees paid by the PCG to join the platform are recognized upon processing of the applications. Wag! Wellness and Pet Food & Treat revenue performance obligation is completed, and revenue is recognized when an end-user completes an action or conversion activity. Principal vs. Agent Considerations Judgment is required in determining whether the Company is the principal or agent in transactions with PCGs and Pet Parents. The Company evaluated the presentation of revenues on a gross or net basis based on whether the Company controls the service provided to the Pet Parent and is the principal (i.e., “gross”), or whether the Company arranges for other parties to provide the service to the Pet Parent and is an agent (i.e. “net”). The Company’s role in a transaction on the platform is to facilitate PCGs finding, applying, and completing a successful pet care service for a Pet Parent. The Company has concluded it is the agent in transactions with PCGs and Pet Parents because, among other factors, the Company’s role is to facilitate pet service opportunities and it is not responsible for nor controls the delivery of pet services provided by the PCGs to the Pet Parents. Gift Cards The Company sells gift cards that can be redeemed by Pet Parents through the platform. Proceeds from the sale of gift cards are deferred and recorded as contract liabilities in Deferred revenue within the Company’s condensed consolidated balance sheets until Pet Parents use the card to place orders on our platform. When gift cards are redeemed, revenue is recognized on a net basis as the difference between the amounts collected from the purchaser less amounts remitted to PCGs. Unused gift cards are included in Deferred revenue within the Company’s consolidated balance sheets. The Company recognizes breakage revenue based on historical redemption patterns. Incentives The Company offers discounts and promotions to encourage use of the Company’s platform. These promotions are generally pricing actions in the form of discounts that reduce the price Pet Parents pay PCGs for services. These promotions result in a lower fee earned by the Company from the PCG. Accordingly, the Company records the cost of these promotions as a reduction of revenues at the time the PCG service is completed. Discounts on services offered through our subscription program are also recorded as a reduction of revenues. Loss Per Share The Company follows the two-class method when computing loss per share when shares issued meet the definition of participating securities. The two-class method determines loss per share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. For periods in which the Company reports net losses, diluted loss per share is the same as basic loss per share because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive

Redeemable Preferred Stock and Stockholders' Equity (Deficit) - CHW Public and Private Placement Warrants (Details)		9 Months Ended
	Aug. 09, 2022 $ / shares shares	Sep. 30, 2023 day $ / shares shares	Aug. 08, 2022 shares	Sep. 01, 2021 $ / shares year
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants outstanding (in shares)	91,130
Fair value (in dollars per share) \| $ / shares				$ 1.32
Stock price trigger for redemption of public warrants (in dollars per share) \| $ / shares		$ 16.50
Threshold trading days for redemption of public warrants \| day		20
Number of trading days over which the reported sale price is measured when determining the redemption price \| day		30
Public Warrants
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants outstanding (in shares)		12,500,000	12,500,000
Number of warrants to purchase common stock (in shares)	12,500,000
Number of shares issuable per warrant (in shares)	1
Weighted average exercise price for the warrants (in dollars per share) \| $ / shares	$ 11.50
Redemption price per public warrant (in dollars per share) \| $ / shares		$ 0.01
Redemption period		20 days
Private Warrants
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants outstanding (in shares)		3,895,564	4,238,636
Class of warrant or right, cancelled (in shares)	4,238,636
Number of warrants to purchase common stock (in shares)	3,895,564
CHW Warrants
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Adjustment term option upon completion of business combination	30 days
Adjustment term option upon IPO closing date	12 months
CHW Warrants \| Stock Price
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants, measurement input \| $ / shares				10.00
CHW Warrants \| Exercise Price
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants, measurement input \| $ / shares				11.50
CHW Warrants \| Dividend Yield
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants, measurement input				0
CHW Warrants \| Volatility
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants, measurement input				0.2200
CHW Warrants \| Risk-Free Interest Rate
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants, measurement input				0.0131
CHW Warrants \| Expected Term
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants, measurement input \| year				5

Goodwill and Other Intangible Assets - Schedule of Gross Carrying Amounts and Accumulated Amortization (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross Carrying Value	$ 9,816	$ 3,245
Finite-lived intangible assets, Accumulated Amortization	(1,829)	(704)
Finite-lived intangible assets, Net Carrying Amount	7,987	2,541
Indefinite-lived intangible assets	49	49
Total intangible assets	9,865	3,294
Intangible assets, net	8,036	2,590
Customer relationships and licenses
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross Carrying Value	7,686	2,166
Finite-lived intangible assets, Accumulated Amortization	(1,268)	(422)
Finite-lived intangible assets, Net Carrying Amount	6,418	1,744
Developed technology and website content
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross Carrying Value	1,073	783
Finite-lived intangible assets, Accumulated Amortization	(415)	(226)
Finite-lived intangible assets, Net Carrying Amount	658	557
Trademarks
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross Carrying Value	1,052	291
Finite-lived intangible assets, Accumulated Amortization	(141)	(56)
Finite-lived intangible assets, Net Carrying Amount	911	235
Pharmacy board licenses
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross Carrying Value	5	5
Finite-lived intangible assets, Accumulated Amortization	(5)	0
Finite-lived intangible assets, Net Carrying Amount	$ 0	$ 5

Leases - Schedule of Future Minimum Lease Payments (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Leases [Abstract]
2023	$ 20
2024	414
2025	424
2026	216
2027	175
2028	163
Total lease payments	1,412
Less: imputed interest	(213)
Present value of lease liabilities	$ 1,199

Commitments and Contingencies (Details) - USD ($) $ in Millions		1 Months Ended	3 Months Ended
	Jun. 29, 2023	Aug. 31, 2023	Jun. 30, 2023	Sep. 30, 2023	Nov. 30, 2019	Aug. 31, 2018
Wag Hotels, Inc Litigation
Loss Contingencies [Line Items]
Settlement amount	$ 0.5
Settlement amount recognized as accrued liability			$ 0.5
Unemployment Insurance Contributions, Independent Contractors
Loss Contingencies [Line Items]
Unemployment insurance contributions				$ 1.3	$ 1.7	$ 0.2
Amount of claim paid		$ 0.4

Redeemable Preferred Stock and Stockholders' Equity (Deficit) - Preferred Stock (Details) $ / shares in Units, $ in Thousands		3 Months Ended
	Jan. 28, 2022 USD ($) shares	Mar. 31, 2022 USD ($) shares	Sep. 30, 2023 $ / shares shares	Aug. 09, 2022
Redeemable Preferred Stock - Mezzanine Equity
Issuance of Series P preferred stock, net of issuance costs (in shares)		1,100,000
Issuance of Series P preferred stock, net of issuance costs \| $		$ 10,925
Preferred stock, par value, (in dollars per share) \| $ / shares			$ 0.0001
Preferred stock, shares authorized (in shares)			1,000,000
Preferred stock, shares issued (in shares)			0
Preferred stock, shares outstanding (in shares)			0
Series P Redeemable Convertible Preferred Stock
Redeemable Preferred Stock - Mezzanine Equity
Issuance of Series P preferred stock, net of issuance costs (in shares)	1,100,000
Issuance of Series P preferred stock, net of issuance costs \| $	$ 11,000
Conversion basis	1			1
Preferred stock, par value, (in dollars per share) \| $ / shares			$ 0.0001
Conversion ratio			0.97

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 22,304	$ 38,966
Accounts receivable, net	8,485	5,872
Prepaid expenses and other current assets	3,496	2,585
Total current assets	34,285	47,423
Property and equipment, net	71	88
Operating lease right-of-use assets	1,119	695
Intangible assets, net	8,036	2,590
Goodwill	4,646	1,451
Other assets	63	64
Total assets	48,220	52,311
Current liabilities:
Accounts payable	8,686	7,174
Accrued expenses and other current liabilities	4,404	4,765
Deferred revenue	1,768	2,232
Deferred purchase consideration – current portion	724	750
Operating lease liabilities – current portion	300	306
Notes payable – current portion	1,589	1,264
Total current liabilities	17,471	16,491
Operating lease liabilities – non-current portion	899	435
Notes payable – non-current portion, net of debt discount and warrant allocation of $5,037 and $7,008 as of September 30, 2023 and December 31, 2022, respectively	25,709	24,970
Deferred purchase consideration – non-current portion	0	493
Other non-current liabilities	218	0
Total liabilities	44,297	42,389
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock, $0.0001 par value; 110,000 shares authorized as of both September 30, 2023 and December 31, 2022; 39,238 and 36,849 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	4	4
Additional paid-in capital	162,188	158,335
Accumulated deficit	(158,269)	(148,417)
Total stockholders’ equity	3,923	9,922
Total liabilities and stockholders’ equity	$ 48,220	$ 52,311

Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 4,646		$ 4,646		$ 1,451
Amortization expense	$ 400	$ 100	$ 1,100	$ 400

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

Loss Per Share

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Loss Per Share

The following participating securities have been excluded from the computation of diluted loss per share for the periods presented because including them would have been anti-dilutive:


	Nine Months Ended
	September 30, 2023	September 30, 2022
	(in thousands)
Earnout Shares	15,000	15,000
Options and RSUs issued and outstanding	10,896	7,420
Warrants issued and outstanding	18,292	18,292
Delayed share issuance related to acquisition	51	—
Total	44,239	40,712

All unvested Earnout Shares are excluded from basic and diluted loss per share as such shares are contingently issuable only when the share price of the Company’s common stock exceeds specified thresholds, which had not been achieved as of September 30, 2023.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands	Total	Previously Reported	Revision of Prior Period, Adjustment	Common Stock	Common Stock Previously Reported	Common Stock Revision of Prior Period, Adjustment	Additional Paid-in Capital	Additional Paid-in Capital Previously Reported	Accumulated Deficit	Accumulated Deficit Previously Reported
Redeemable Preferred Stock - Mezzanine Equity beginning balance (in shares) at Dec. 31, 2021	23,859	24,545	(686)
Redeemable Preferred Stock - Mezzanine Equity beginning balance at Dec. 31, 2021	$ 110,265	$ 110,265
Increase (Decrease) in Temporary Equity [Roll Forward]
Issuance of Series P preferred stock, net of issuance costs (in shares)	1,100
Issuance of Series P preferred stock, net of issuance costs	$ 10,925
Redeemable Preferred Stock - Mezzanine Equity ending balance (in shares) at Mar. 31, 2022	24,959
Redeemable Preferred Stock - Mezzanine Equity ending balance at Mar. 31, 2022	$ 121,190
Beginning balance (in shares) at Dec. 31, 2021				6,121	6,297	(176)
Beginning balance at Dec. 31, 2021	(106,113)	$ (106,113)		$ 1	$ 1		$ 3,736	$ 3,736	$ (109,850)	$ (109,850)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	54						54
Net loss	(2,350)								(2,350)
Balance at the end (in shares) at Mar. 31, 2022				6,121
Ending balance at Mar. 31, 2022	$ (108,409)			$ 1			3,790		(112,200)
Redeemable Preferred Stock - Mezzanine Equity beginning balance (in shares) at Dec. 31, 2021	23,859	24,545	(686)
Redeemable Preferred Stock - Mezzanine Equity beginning balance at Dec. 31, 2021	$ 110,265	$ 110,265
Redeemable Preferred Stock - Mezzanine Equity ending balance (in shares) at Sep. 30, 2022	0
Redeemable Preferred Stock - Mezzanine Equity ending balance at Sep. 30, 2022	$ 0
Beginning balance (in shares) at Dec. 31, 2021				6,121	6,297	(176)
Beginning balance at Dec. 31, 2021	(106,113)	$ (106,113)		$ 1	$ 1		3,736	$ 3,736	(109,850)	$ (109,850)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(44,371)
Balance at the end (in shares) at Sep. 30, 2022				38,095
Ending balance at Sep. 30, 2022	$ 7,237			$ 4			161,454		(154,221)
Redeemable Preferred Stock - Mezzanine Equity beginning balance (in shares) at Mar. 31, 2022	24,959
Redeemable Preferred Stock - Mezzanine Equity beginning balance at Mar. 31, 2022	$ 121,190
Redeemable Preferred Stock - Mezzanine Equity ending balance (in shares) at Jun. 30, 2022	24,959
Redeemable Preferred Stock - Mezzanine Equity ending balance at Jun. 30, 2022	$ 121,190
Beginning balance (in shares) at Mar. 31, 2022				6,121
Beginning balance at Mar. 31, 2022	(108,409)			$ 1			3,790		(112,200)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock from exercises (in shares)				20
Stock-based compensation	40						40
Net loss	(1,090)								(1,090)
Balance at the end (in shares) at Jun. 30, 2022				6,141
Ending balance at Jun. 30, 2022	$ (109,459)			$ 1			3,830		(113,290)
Increase (Decrease) in Temporary Equity [Roll Forward]
Conversion of preferred stock to common (in shares)	(24,959)
Conversion of preferred stock to common stock	$ (121,190)
Redeemable Preferred Stock - Mezzanine Equity ending balance (in shares) at Sep. 30, 2022	0
Redeemable Preferred Stock - Mezzanine Equity ending balance at Sep. 30, 2022	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock from exercises (in shares)				49
Stock-based compensation	23,922						23,922
Conversion of preferred stock to common stock (in shares)				24,959
Conversion of preferred stock to common stock	121,190			$ 2			121,188
Stock Issued During Period, Value, Reverse Recapitalization	10,544			$ 1			10,543
Stock Issued During Period, Value, Reverse Recapitalization				6,646
Issuance of Community Shares (in shares)				300
Issuance of Community Shares	1,971						1,971
Net loss	(40,931)								(40,931)
Balance at the end (in shares) at Sep. 30, 2022				38,095
Ending balance at Sep. 30, 2022	$ 7,237			$ 4			161,454		(154,221)
Redeemable Preferred Stock - Mezzanine Equity beginning balance (in shares) at Dec. 31, 2022	0
Redeemable Preferred Stock - Mezzanine Equity beginning balance at Dec. 31, 2022	$ 0
Redeemable Preferred Stock - Mezzanine Equity ending balance (in shares) at Mar. 31, 2023	0
Redeemable Preferred Stock - Mezzanine Equity ending balance at Mar. 31, 2023	$ 0
Beginning balance (in shares) at Dec. 31, 2022				36,849
Beginning balance at Dec. 31, 2022	9,922			$ 4			158,335		(148,417)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock from exercises (in shares)				580
Issuance of common stock from exercise of stock options and restricted stock units	54						54
Stock-based compensation	1,342						1,342
Net loss	(3,787)								(3,787)
Balance at the end (in shares) at Mar. 31, 2023				37,429
Ending balance at Mar. 31, 2023	$ 7,531			$ 4			159,731		(152,204)
Redeemable Preferred Stock - Mezzanine Equity beginning balance (in shares) at Dec. 31, 2022	0
Redeemable Preferred Stock - Mezzanine Equity beginning balance at Dec. 31, 2022	$ 0
Redeemable Preferred Stock - Mezzanine Equity ending balance (in shares) at Sep. 30, 2023	0
Redeemable Preferred Stock - Mezzanine Equity ending balance at Sep. 30, 2023	$ 0
Beginning balance (in shares) at Dec. 31, 2022				36,849
Beginning balance at Dec. 31, 2022	9,922			$ 4			158,335		(148,417)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(9,852)
Balance at the end (in shares) at Sep. 30, 2023				39,238
Ending balance at Sep. 30, 2023	$ 3,923			$ 4			162,188		(158,269)
Redeemable Preferred Stock - Mezzanine Equity beginning balance (in shares) at Mar. 31, 2023	0
Redeemable Preferred Stock - Mezzanine Equity beginning balance at Mar. 31, 2023	$ 0
Redeemable Preferred Stock - Mezzanine Equity ending balance (in shares) at Jun. 30, 2023	0
Redeemable Preferred Stock - Mezzanine Equity ending balance at Jun. 30, 2023	$ 0
Beginning balance (in shares) at Mar. 31, 2023				37,429
Beginning balance at Mar. 31, 2023	7,531			$ 4			159,731		(152,204)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock from exercises (in shares)				1,298
Issuance of common stock from exercise of stock options and restricted stock units	36						36
Stock-based compensation	1,121						1,121
Shares issued for acquisition (in shares)				49
Shares issued for acquisition	225						225
Net loss	(3,869)								(3,869)
Balance at the end (in shares) at Jun. 30, 2023				38,776
Ending balance at Jun. 30, 2023	$ 5,044			$ 4			161,113		(156,073)
Redeemable Preferred Stock - Mezzanine Equity ending balance (in shares) at Sep. 30, 2023	0
Redeemable Preferred Stock - Mezzanine Equity ending balance at Sep. 30, 2023	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock from exercises (in shares)				462
Issuance of common stock from exercise of stock options and restricted stock units	10						10
Stock-based compensation	1,065						1,065
Net loss	(2,196)								(2,196)
Balance at the end (in shares) at Sep. 30, 2023				39,238
Ending balance at Sep. 30, 2023	$ 3,923			$ 4			$ 162,188		$ (158,269)

Acquisitions

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Acquisitions

Acquisition of Compare Pet Insurance

On August 3, 2021, the Company acquired Compare Pet Insurance, Inc. (“CPI”) for $3.5 million in cash consideration, and $0.2 million in common stock consideration, consisting of a total of 639,000 units of common stock. Of the cash consideration purchase price, $1.5 million was paid on the acquisition date and the remaining $2.0 million paid pro-rata quarterly over the next three years starting in the fourth quarter of 2021. The deferred purchase consideration, which was recorded at its fair value on the acquisition date, is presented in accrued expenses and other current liabilities, as well as other non-current liabilities on the condensed consolidated balance sheet. As of September 30, 2023 and December 31, 2022, the amounts included in accrued expenses and other current liabilities, as well as other non-current liabilities on the condensed consolidated balance sheet, were $0.7 million and $1.2 million, respectively.

Acquisition of Dog Food Advisor

On January 5, 2023, the Company entered into an Asset Purchase Agreement with Clicks and Traffic LLC (“Dog Food Advisor”) to purchase its Dog Food Advisor (“DFA”) assets for $9.0 million in cash consideration. Of the cash consideration purchase price, $8.1 million was paid on the acquisition date and the remaining $0.9 million was deposited into an escrow account as an indemnification hold back for a period of 12 months. No working capital was acquired from Dog Food Advisor. The Company incurred less than $0.1 million in transaction-related costs during the first quarter of 2023 in connection with the acquisition of DFA, which are included in general and administrative expenses within the Company’s condensed consolidated statement of operations.

The preliminary purchase consideration allocation was as follows:


	January 5, 2023
	(in thousands)
Intangible assets	$	5,950
Goodwill	3,050
Total purchase consideration	$	9,000

The table below summarizes the fair value and the estimated useful lives of the acquired intangible assets:

January 5,
2023

Estimated Useful Life

(in thousands)

Developed technology and website content

1,950

5 years

Strategic customer relationships and subscriber lists

3,600

8 years

Trademarks

400

10 years

Total intangible assets

5,950

As of September 30, 2023, the purchase price allocated to the fair value of assets acquired, including intangibles, recorded in conjunction with the DFA acquisition remains preliminary as the Company is in the process of assessing the acquired intangible assets in order to finalize the accounting for the business combination. The preliminary purchase price allocation has been developed based on estimates with assumptions made by management. Although the Company does not expect the final allocation to vary significantly, there may be adjustments made to the preliminary purchase price allocation that could result in changes to the preliminary fair values allocated, assigned useful lives, and associated amortization recorded. Goodwill recognized as a result of this acquisition is deductible for tax purposes.

Pro forma disclosures required under ASC 805-10-50 are not presented because the pro forma impacts on the current period and prior year comparable period are not material.

Acquisition of Maxbone, Inc.

On April 6, 2023, the Company acquired Maxbone, Inc., a top-tier digital platform for modern pet essentials, for $0.5 million in cash consideration and 100,000 common shares with a fair value of $0.2 million as of the closing date. Of the $0.2 million of common stock consideration, $0.1 million was issued on the acquisition date and the remaining $0.1 million will be issued in the future after the indemnification holdback period expires 12 months after the acquisition close. The acquisition expanded the Company’s reach into the Pet Supplies market, while remaining committed to the needs and standards of the premium Pet Parent.

Redeemable Preferred Stock and Stockholders' Equity (Deficit) - Common Stock Warrants (Details)		3 Months Ended
	Aug. 09, 2022 Lender shares	Sep. 30, 2022 lender shares	Dec. 31, 2018 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants outstanding (in shares)	91,130
Number of lenders	2	2
Exchange ratio	0.97
Common Stock Warrants
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants outstanding (in shares)			91,310
Weighted average exercise price for the warrants (in dollars per share) \| $ / shares			$ 1.54
Warrants and rights outstanding, term			10 years
Exchange ratio			0.97
Number of warrants to purchase common stock (in shares)		72,434

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

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+ Details

Significant Accounting Policies (Policies)	9 Months Ended
Significant Accounting Policies (Policies)	Sep. 30, 2023
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The unaudited condensed consolidated interim financial information of the Company has been prepared in accordance with Article 10 of the Securities and Exchange Commission’s (“SEC”) Regulation S-X. Accordingly, as permitted by Article 10 of Regulation S-X, it does not include all of the information required by generally accepted accounting principles in the U.S. (“U.S. GAAP”) for complete financial statements. The condensed consolidated balance sheet as of December 31, 2022 was derived from the audited financial statements at that date and does not include all the disclosures required by U.S. GAAP, as permitted by Article 10 of Regulation S-X. The Company’s unaudited condensed consolidated financial statements as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 include Wag! Group Co. and all of its subsidiaries. In the opinion of management, the accompanying financial information contains all adjustments, consisting of normal recurring adjustments, necessary to state fairly the Company’s unaudited condensed consolidated financial statements as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, or the 2022 10-K. Operating results for the three and nine months ended September 30, 2023 and 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The number of shares and per share amounts prior to the Merger have been retroactively restated as shares reflecting conversion at the exchange ratio of 0.97 established in the CHW Business Combination. See Note 3, Business Combination with CHW, for more information regarding the CHW Business Combination.
Use of Estimates	Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and disclosures as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on various factors, including historical experience, and on various other assumptions that are believed to be reasonable under the circumstances, when these carrying values are not readily available from other sources. Significant items subject to estimates and assumptions include, but are not limited to, fair values of financial instruments, assumptions used in the valuation of common and preferred stock, valuation of stock-based compensation and warrants, and the valuation allowance for deferred income taxes. Actual results may differ from these estimates.
Recently Adopted Accounting Pronouncements and New Accounting Pronouncements	Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU changes the impairment model for most financial assets, requiring the use of an expected loss model which requires entities to estimate the lifetime expected credit loss on financial assets measured at amortized cost. Such credit losses will be recorded as an allowance to offset the amortized cost of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In addition, credit losses relating to available-for-sale debt securities will now be recorded through an allowance for credit losses rather than as a direct write-down to the security. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of this guidance during the first quarter of 2023 did not have a material impact on the Company’s condensed consolidated financial statements. New Accounting Pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). This ASU simplifies the accounting for convertible instruments by eliminating certain accounting models, resulting in fewer embedded conversion features being separately recognized from the host contract, and also amends the guidance for derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. Additionally, the amendments in this ASU affect the diluted EPS calculation for convertible instruments. It requires that the effect of potential share settlement be included in the diluted EPS calculation when a convertible instrument may be settled in cash or shares; the if-converted method as opposed to the treasury stock method is required to calculate diluted EPS for these types of convertible instruments. The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the potential impact of this adoption on its condensed consolidated financial statements. In August 2023, the FASB issued ASU No. 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement (“ASU 2023-05”). This ASU requires a joint venture to recognize and initially measure its assets and liabilities using a new basis of accounting upon formation, i.e. at fair value (with exceptions to fair value measurement that are consistent with the business combinations guidance). The amendments in this update are effective for all newly-formed joint venture entities with a formation date on or after January 1, 2025, with early adoption permitted. Joint ventures formed prior to the adoption date may elect to apply the new guidance retrospectively back to their original formation date. The Company is evaluating the potential impact of this adoption on its condensed consolidated financial statements.
Equity Method Investment	Equity Method Investment During the fourth quarter of 2022, the Company’s subsidiary, Compare Pet Insurance Services, Inc. entered into an agreement to invest $1.5 million for 49% ownership in a new limited liability company, which was funded in the first quarter of 2023. The investment was accounted for as an equity method investment, as the Company had less than 50% ownership and did not control the entity. During the nine months ended September 30, 2023, the Company recognized $1.8 million of Royalty expenses within its condensed consolidated statements of operations related to fees payable to the equity method investee. During the third quarter of 2023, the Company acquired the outstanding 51% ownership of the limited liability company for an aggregate purchase price of approximately $2.2 million. The Company accounted for the transaction as an asset acquisition using the cost accumulation model to determine the cost to be allocated to the assets acquired, which resulted in the derecognition of royalties payable to the equity method investee of approximately $1.8 million and the recognition of intangible assets acquired of approximately $0.2 million. As a result of the transaction, the limited liability company became a wholly-owned subsidiary of the Company and the Company began consolidating the entity as part of its condensed consolidated financial statements.
Revenue Recognition	Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Through its Services offerings, the Company principally generates Services revenue from service fees charged to PCGs to successfully complete a pet care service to a Pet Parent via the platform. The Company also generates revenue from subscription fees paid by Pet Parents for Wag! Premium and fees paid by PCGs to join the platform. Additionally, through its Wellness and Pet Food & Treat offerings, the Company generates revenue through commission fees paid by third-party service partners in the form of ‘revenue-per-action’ or conversion activity defined in our agreements with the respective third-party service partner. For some of the Company’s arrangements with third-party service partners, the transaction price is considered variable, and an estimate of the transaction price is recorded when the action occurs. The estimated transaction price used in the variable consideration is based on historical data with the respective third-party service partner and the consideration is measured and settled monthly. The Company enters into terms of service with PCGs and Pet Parents to use the platform (“Terms of Service Agreements”), as well as an Independent Contractor Agreement (“ICA”) with PCGs (the ICA, together with the Terms of Service Agreements, the “Agreements”). The Agreements govern the fees the Company charges the PCGs and Pet Parents, where applicable, for each transaction. Upon acceptance of a transaction, PCGs agree to perform the services that are requested by a Pet Parent. The acceptance of a transaction request combined with the Agreements establishes enforceable rights and obligations for each transaction. A contract exists between the Company and its customers after both the PCGs and Pet Parent accept a transaction request and the PCGs ability to cancel the transaction lapses. For Wag! Wellness and Pet Food & Treat revenues, the Company enters into agreements with third-party service partners which define the action by a Pet Parent that results in the Company earning and receiving a commission fee from the third-party service partner. Wag!’s service obligations are performed, and revenue is recognized for fees earned related to the facilitation and completion of a pet service transaction between the Pet Parent and the PCG through the use of our platform. Revenue generated from the Company’s Wag! Premium subscription is recognized on a ratable basis over the contractual period, which is generally one month to one year depending on the type of subscription purchased by the Pet Parent. Unused subscription amounts are included in Deferred revenue within the Company’s condensed consolidated balance sheets. Revenue related to the fees paid by the PCG to join the platform are recognized upon processing of the applications. Wag! Wellness and Pet Food & Treat revenue performance obligation is completed, and revenue is recognized when an end-user completes an action or conversion activity. Principal vs. Agent Considerations Judgment is required in determining whether the Company is the principal or agent in transactions with PCGs and Pet Parents. The Company evaluated the presentation of revenues on a gross or net basis based on whether the Company controls the service provided to the Pet Parent and is the principal (i.e., “gross”), or whether the Company arranges for other parties to provide the service to the Pet Parent and is an agent (i.e. “net”). The Company’s role in a transaction on the platform is to facilitate PCGs finding, applying, and completing a successful pet care service for a Pet Parent. The Company has concluded it is the agent in transactions with PCGs and Pet Parents because, among other factors, the Company’s role is to facilitate pet service opportunities and it is not responsible for nor controls the delivery of pet services provided by the PCGs to the Pet Parents. Gift Cards The Company sells gift cards that can be redeemed by Pet Parents through the platform. Proceeds from the sale of gift cards are deferred and recorded as contract liabilities in Deferred revenue within the Company’s condensed consolidated balance sheets until Pet Parents use the card to place orders on our platform. When gift cards are redeemed, revenue is recognized on a net basis as the difference between the amounts collected from the purchaser less amounts remitted to PCGs. Unused gift cards are included in Deferred revenue within the Company’s consolidated balance sheets. The Company recognizes breakage revenue based on historical redemption patterns. Incentives The Company offers discounts and promotions to encourage use of the Company’s platform. These promotions are generally pricing actions in the form of discounts that reduce the price Pet Parents pay PCGs for services. These promotions result in a lower fee earned by the Company from the PCG. Accordingly, the Company records the cost of these promotions as a reduction of revenues at the time the PCG service is completed. Discounts on services offered through our subscription program are also recorded as a reduction of revenues.
Loss Per Share	Loss Per Share The Company follows the two-class method when computing loss per share when shares issued meet the definition of participating securities. The two-class method determines loss per share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. For periods in which the Company reports net losses, diluted loss per share is the same as basic loss per share because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive

- Definition

Disclosure of accounting policy for revenue from contract with customer.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-17

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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-Publisher FASB
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
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-URI https://asc.fasb.org//606/tableOfContent

+ Details

Revenues (Tables)

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenues

The following table presents the Company’s revenues disaggregated by offering:


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(in thousands)
Services revenue	$	6,551	$	5,866	$	18,159	$	15,973
Wellness revenue	13,546		9,513		39,426		21,856
Pet food & treats revenue	1,703		—		4,658		—
Total revenues	$	21,800	$	15,379	$	62,243	$	37,829

Loss Per Share - Schedule of Anti-dilutive Securities Excluded from Computation of Diluted Net Loss Per Share (Details) - shares shares in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	44,239	40,712
Earnout Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	15,000	15,000
Options and RSUs issued and outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	10,896	7,420
Warrants issued and outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	18,292	18,292
Delayed share issuance related to acquisition
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	51	0

Acquisitions - Schedule of Purchase Consideration (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Jan. 05, 2023	Dec. 31, 2022
Business Acquisition, Contingent Consideration [Line Items]
Goodwill	$ 4,646		$ 1,451
DFA
Business Acquisition, Contingent Consideration [Line Items]
Intangible assets		$ 5,950
Goodwill		3,050
Total purchase consideration		$ 9,000

- Definition

+ References + Details

Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

The Company has stock-based compensation plans, which are more fully described in Note 2, Summary of Significant Accounting Policies, and Note 11, Stockholders’ Equity (Deficit) and Mezzanine Equity, to the Consolidated Financial Statements included in the 2022 10-K. During the nine months ended September 30, 2023, the Company granted restricted stock units subject to service conditions.

The following table provides information about stock-based compensation expense by financial statement line item:


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(in thousands)
Platform operations and support	$	209	$	2,856	$	815	$	2,874
Sales and marketing	174		2,068		533		2,073
General and administrative	682		18,998		2,180		19,069
Total stock-based compensation expense	$	1,065	$	23,922	$	3,528	$	24,016

Stock Options

The following table summarizes the activities for all stock options under the Company’s stock-based compensation plans for the nine months ended September 30, 2023:


	Number of Options Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value(1)
	(in thousands)				(in thousands)
Outstanding as of December 31, 2022	7,194	$	0.40	7.19 years	$	19,292
Granted	—	$	—
Exercised	(986)	$	0.10
Forfeited or expired	(22)	$	2.75
Outstanding as of September 30, 2023	6,186	$	0.45	6.43 years	$	10,051

(1) The intrinsic value is the amount by which the current market value of the underlying stock exceeds the exercise price of the stock awards.

Restricted Stock Units

The following table summarizes the activities for all restricted stock units (“RSUs”) under the Company’s stock-based compensation plans for the nine months ended September 30, 2023:


	Number of Shares	Weighted-Average Grant Date Fair Value Per Share
	(in thousands)
Outstanding and nonvested as of December 31, 2022	4,195	$	2.44
Granted	1,999	$	2.34
Vested	(1,354)	$	2.45
Forfeited	(130)	$	2.36
Outstanding and nonvested as of September 30, 2023	4,710	$	2.39

As of September 30, 2023, the total unrecognized compensation cost related to all nonvested restricted stock units was $10.7 million and the related weighted-average period over which it is expected to be recognized was approximately 2.33 years.

Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of Future Minimum Payments

As of September 30, 2023, annual scheduled principal payments of debt were as follows:


	Amount
	(in thousands)
2023	$	357
2024	1,751
2025	30,227
Total principal payments	$	32,335

Long-Term Debt - PPP Loan (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Aug. 05, 2020	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Debt Instrument [Line Items]
Principal and interest payments balance		$ 32,335		$ 32,335
PPP Loan
Debt Instrument [Line Items]
Loan proceeds	$ 5,100
Applied loan forgiveness amount	$ 3,500
Fixed annual interest rate	1.00%
Repayment of debt				300	$ 300
Principal and interest payments balance		900		900		$ 1,200
Interest expense		$ 2	$ 3	$ 8	$ 11

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 835
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Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
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+ Details

Redeemable Preferred Stock and Stockholders' Equity (Deficit) (Tables)

9 Months Ended

Sep. 30, 2023

Stockholders' Equity Note [Abstract]

Schedule of Quantitative Information Regarding Fair Value Measurements at Issuance

The following table provides quantitative information regarding fair value measurements at issuance on September 1, 2021:


	Share Price		Exercise Price		Dividend Yield		Volatility		Risk-Free Interest Rate		Expected Term

CHW Warrants	$	10.00	$	11.50	—	%	22.00	%	1.31	%	5 years

Stock-Based Compensation - Schedule of Total Stock-Based Compensation Expense by Function (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total stock-based compensation expense	$ 1,065	$ 23,922	$ 3,528	$ 24,016
Platform operations and support
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total stock-based compensation expense	209	2,856	815	2,874
Sales and marketing
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total stock-based compensation expense	174	2,068	533	2,073
General and administrative
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total stock-based compensation expense	$ 682	$ 18,998	$ 2,180	$ 19,069

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Business Combination with CHW - Reverse Recapitalization Shares (Details)	Nov. 01, 2022 shares	Aug. 09, 2022 $ / shares shares	Aug. 05, 2022 shares	Sep. 30, 2023 shares	Dec. 31, 2022 shares	Aug. 08, 2022 shares	Jan. 28, 2022
Schedule Of Reverse Recapitalization [Line Items]
Common stock, outstanding (in shares)		37,746,000		39,238,000	36,849,000
Business Combination (in shares)		6,524,000
Other share activity (Analyst Shares, Warrant Exercises) (in shares)		122,000
Business Combination, Financing Shares and Other Related Shares (in shares)		6,646,000
Legacy Wag! Shares (in shares)		31,100,000
Derivative instrument, contingent consideration, liability, shares (in shares)	1,000,000		2,393,378
Common and preferred stock outstanding prior to the Business Combination (in shares)						30,863,283
Exchange ratio		0.97
Private placement
Schedule Of Reverse Recapitalization [Line Items]
PIPE and Backstop Shares (in shares)		500,000
Price per share (in dollars per share) \| $ / shares		$ 10.00
Series P Redeemable Convertible Preferred Stock
Schedule Of Reverse Recapitalization [Line Items]
Number of shares converted (in shares)		1,100,000
Conversion basis		1					1
Public Shareholders
Schedule Of Reverse Recapitalization [Line Items]
Shares issued for acquisition (in shares)		2,906,000
Sponsor Members
Schedule Of Reverse Recapitalization [Line Items]
Shares issued for acquisition (in shares)		3,118,000
Craig-Hallum Capital Group LLC
Schedule Of Reverse Recapitalization [Line Items]
Other share activity (Analyst Shares, Warrant Exercises) (in shares)		50,000
Price per share (in dollars per share) \| $ / shares		$ 4.83
CHW Acquisition Corporation
Schedule Of Reverse Recapitalization [Line Items]
Common stock, outstanding (in shares)						12,500,000
Less redemption of CHW shares (in shares)		(9,593,970)

Stock-Based Compensation - Schedule of Option Activity (Details) - 2014 Plan $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2023 USD ($) $ / shares shares	Dec. 31, 2022 USD ($) $ / shares shares
Number of Options Outstanding
Outstanding beginning (in shares) \| shares	7,194
Granted (in shares) \| shares	0
Exercised (in shares) \| shares	(986)
Forfeited or expired (in shares) \| shares	(22)
Outstanding ending (in shares) \| shares	6,186	7,194
Weighted-Average Exercise Price
Outstanding, beginning (in dollars per share) \| $ / shares	$ 0.40
Granted (in dollars per share) \| $ / shares	0
Exercised (in dollars per share) \| $ / shares	0.10
Forfeited or expired (in dollars per share) \| $ / shares	2.75
Outstanding, ending (in dollars per share) \| $ / shares	$ 0.45	$ 0.40
Weighted-Average Remaining Contractual Life	6 years 5 months 4 days	7 years 2 months 8 days
Aggregate Intrinsic Value \| $	$ 10,051	$ 19,292

Contract Liabilities (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
Contract Liabilities (Details) - USD ($) $ in Millions	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Contract with Customer, Liability [Abstract]
Contract liabilities	$ 1.8		$ 1.8		$ 2.2
Amount of revenue included in contract with customer liability	$ 0.6	$ 0.3	$ 1.5	$ 0.8

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Financial Assets


	September 30, 2023
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Cash equivalents:
Money market funds	$	13,797	$	—	$	—	$	13,797
Total cash equivalents	13,797		—		—		13,797
Total assets at fair value	$	13,797	$	—	$	—	$	13,797


	December 31, 2022
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Cash equivalents:
Money market funds	$	31,690	$	—	$	—	$	31,690
Total cash equivalents	31,690		—		—		31,690
Total assets at fair value	$	31,690	$	—	$	—	$	31,690

Long-Term Debt - Blue Torch Financing and Warrant Agreement (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
	Aug. 09, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Debt Instrument [Line Items]
Liquidity	$ 5,000
Principal and interest payments balance		$ 32,335		$ 32,335
Warrants outstanding (in shares)	91,130
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001		$ 0.0001		$ 0.0001
Lender Warrants
Debt Instrument [Line Items]
Warrants outstanding (in shares)	1,896,177
Weighted average exercise price for the warrants (in dollars per share)	$ 11.50
Warrant termination term if earliest occurrence	10 years
The Credit Facility \| Secured Debt
Debt Instrument [Line Items]
Loan proceeds	$ 32,200
Fixed annual interest rate		15.65%		15.65%		14.84%
Repayment of debt				$ 600	$ 0
Principal and interest payments balance		$ 31,400		31,400		$ 32,000
Interest expense, debt		$ 1,200	$ 600	$ 3,700	$ 600
The Credit Facility \| Secured Debt \| Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Term of loan (in years)	3 years
Fixed annual interest rate	2.00%
Prepayment amounts	3.00%
The Credit Facility \| Secured Debt \| Debt Instrument, Redemption, Period Two
Debt Instrument [Line Items]
Fixed annual interest rate	3.00%
Prepayment amounts	2.00%
The Credit Facility \| Secured Debt \| Debt Instrument, Redemption, Period Three
Debt Instrument [Line Items]
Fixed annual interest rate	5.00%
Prepayment amounts	0.00%
The Credit Facility \| Secured Debt \| Variable Rate Component One
Debt Instrument [Line Items]
Basis rates	2.00%
The Credit Facility \| Secured Debt \| Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Basis rates	10.00%
SOFR floor rate	1.00%
The Credit Facility \| Secured Debt \| Secured Overnight Financing Rate (SOFR) \| Variable Rate Component Three
Debt Instrument [Line Items]
Basis rates	1.00%
The Credit Facility \| Secured Debt \| Reference Rate
Debt Instrument [Line Items]
Basis rates	9.00%
SOFR floor rate	2.00%
The Credit Facility \| Secured Debt \| Federal Funds Effective Rate \| Variable Rate Component Two
Debt Instrument [Line Items]
Basis rates	0.50%

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Revenues	$ 21,800	$ 15,379	$ 62,243	$ 37,829
Costs and expenses:
Cost of revenues (exclusive of depreciation and amortization shown separately below)	1,441	1,021	3,710	3,027
Platform operations and support	2,968	5,641	9,630	11,035
Sales and marketing	12,755	11,290	36,788	24,656
Royalty	0	0	1,791	0
General and administrative	4,682	23,781	14,487	28,546
Depreciation and amortization	414	134	1,170	431
Total costs and expenses	22,260	41,867	67,576	67,695
Interest expense, net	1,683	735	4,972	784
Other expense, net	12	13,708	21	13,708
Loss before income taxes and equity in net earnings of affiliate	(2,155)	(40,931)	(10,326)	(44,358)
Income taxes	41	0	79	13
Equity in net earnings of equity method investments	0	0	553	0
Net loss	$ (2,196)	$ (40,931)	$ (9,852)	$ (44,371)
Earnings Per Share
Loss per share, basic (in dollars per share)	$ (0.06)	$ (1.67)	$ (0.26)	$ (3.60)
Loss per share, diluted (in dollars per share)	$ (0.06)	$ (1.67)	$ (0.26)	$ (3.60)
Weighted-average common shares outstanding used in computing loss per share, basic (in shares)	38,987	24,534	38,061	12,322
Weighted-average common shares outstanding used in computing loss per share, diluted (in shares)	38,987	24,534	38,061	12,322

Leases - Summary of Weighted Average Remaining Lease Term and Discount Rate (Details)	Sep. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Weighted-average remaining lease term	4 years	2 years 3 months 18 days
Weighted-average discount rate	7.80%	8.60%

Long-Term Debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Long-Term Debt

Paycheck Protection Program Loan

On August 5, 2020, the Company received loan proceeds of approximately $5.1 million from a financial institution pursuant to the Paycheck Protection Program (the “PPP Loan”) established by the Coronavirus Aid, Relief, and Economic Security Act, of which $3.5 million was subsequently forgiven. The PPP Loan matures on August 5, 2025 and bears interest at a fixed rate of 1.00%. Principal and interest payments are payable monthly.

During the nine months ended September 30, 2023 and 2022, the Company repaid a total amount of $0.3 million and $0.3 million, respectively, on amounts outstanding under the PPP Loan. As of September 30, 2023 and December 31, 2022, the amount outstanding under the PPP Loan was $0.9 million and $1.2 million, respectively.

During the three months ended September 30, 2023 and 2022, the Company recognized $2 thousand and $3 thousand, respectively, of interest expense relating to the PPP Loan. During the nine months ended September 30, 2023 and 2022, the Company recognized $8 thousand and $11 thousand, respectively, of interest expense relating to the PPP Loan.

Blue Torch Financing and Warrant Agreement

On August 9, 2022, Legacy Wag! entered into a financing agreement and warrant agreement with Blue Torch Finance, LLC (together with its affiliated funds and any other parties providing a commitment thereunder, including any additional lenders, agents, arrangers or other parties joined thereto after the date thereof, collectively, the “Debt Financing Sources”), pursuant to which, among other things, the Debt Financing Sources agreed to extend an approximately $32.2 million senior secured term loan credit facility (the “Credit Facility”). Legacy Wag! is the primary borrower under the Credit Facility, the Company is a parent guarantor and substantially all of the Company’s existing and future subsidiaries are subsidiary guarantors. The Credit Facility is secured by a first priority security interest in substantially all assets of the Company and the guarantors.

The Credit Facility bears interest at a floating rate of interest equal to, at Legacy Wag’s option, Secured Overnight Financing Rate (“SOFR”) plus 10.00% per annum or the reference rate plus 9.00% per annum, with the reference rate defined as the greatest of:

•2.00% per annum;

•the federal funds effective rate plus 0.50% per annum;

•one-month SOFR plus 1.00% per annum; and

•the prime rate announced by the Wall Street Journal from time to time.

SOFR will be subject to a floor of 1.00% per annum, and the reference rate will be subject to a floor of 2.00% per annum. Interest will be payable in arrears at the end of each SOFR interest period (but at least every three months) for SOFR borrowings and quarterly in arrears for reference rate borrowings.

The Credit Facility matures in three years after the Closing Date and is subject to quarterly amortization payments of principal, in an aggregate amount equal to 2.00% of the principal amount of the Credit Facility in the first year after closing, 3.00% of the principal amount of the Credit Facility in the second year after closing, and 5.00% of the principal amount of the Credit Facility in the third year after closing. The remaining outstanding principal balance of the Credit Facility is due and payable in full on the maturity date. In addition to scheduled amortization payments, the Credit Facility contains customary mandatory prepayment provisions that require principal prepayments of the Credit Facility upon certain triggering events, including receipt of asset sale proceeds outside of the ordinary course of business, receipt of certain insurance proceeds, and receipt of proceeds of non-permitted debt. The Credit Facility may also be voluntarily prepaid at any time, subject to the payment of a prepayment premium. The prepayment premium is payable for voluntary payments and certain mandatory prepayments, and is equal to an interest make-whole payment plus 3.00% of the principal amount of such prepayment in the first year after closing, 2.00% of the principal amount of such prepayment in the second year after closing, and 0% thereafter.

The Credit Facility contains customary representations and warranties, affirmative covenants, financial reporting requirements, negative covenants and events of default. The negative covenants included in the Financing Agreement impose restrictions on the ability of Legacy Wag, the guarantors, and their subsidiaries to incur indebtedness, grant liens, make investments, make acquisitions, declare and pay restricted payments, prepay junior or subordinated debt, sell assets, and enter into transactions with affiliates, in each case, subject to certain customary exceptions. In addition, the Credit Facility requires compliance with certain financial covenants, specifically a monthly minimum revenue covenant and a minimum liquidity covenant.

Legacy Wag’s obligations under the Blue Torch Financing Agreement are guaranteed by certain of its subsidiaries meeting materiality thresholds set forth in the Blue Torch Financing Agreement (the "Financing Agreement"). Such obligations, including the guarantees, are secured by substantially all of the personal property of the Company and its subsidiary guarantors, including pursuant to a Security Agreement entered into on August 9, 2022. The Blue Torch Financing Agreement establishes the following financial covenants: (i) Legacy Wag's trailing annual aggregate revenue shall exceed certain thresholds as of the end of each monthly computation period as defined therein; and (ii) Liquidity shall not be less than $5 million at any time. The Company was in compliance with these covenants as of September 30, 2023. During the first quarter of 2023, the Company received a waiver regarding covenants for timely reporting and execution of agreements with respect the creation of a new wholly owned subsidiary to hold the Dog Food Advisor assets. The facility was fully drawn upon as of September 30, 2023.

As of September 30, 2023 and December 31, 2022, the interest rate for borrowings under the Term Loan was 15.65% and 14.84%, respectively.

During the nine months ended September 30, 2023 and 2022, the Company repaid a total amount of $0.6 million and zero, respectively, on amounts outstanding under the Credit Facility. As of September 30, 2023 and December 31, 2022, the amount outstanding under the Credit Facility was $31.4 million and $32.0 million, respectively.

During the three months ended September 30, 2023 and 2022, the Company recognized $1.2 million and $0.6 million, respectively, of interest expense relating to the Credit Facility. During the nine months ended September 30, 2023 and 2022, the Company recognized $3.7 million and $0.6 million, respectively, of interest expense relating to the Credit Facility.

On the closing of the Credit Facility, Legacy Wag! also entered into the Lender Warrant Agreement with Vstock Transfer, LLC as warrant agent, pursuant to which affiliates of Blue Torch Capital LP (“Blue Torch”) received 1,896,177 warrants to acquire common stock of the Company, par value $0.0001 per share (“Common Stock”), for $11.50 per whole share (such warrants, the “Lender Warrants”). The Lender Warrants were issued pursuant to the SPAC Warrant Agreement (as defined in the CHW Business Combination Agreement) and are subject to the terms and conditions thereof, as modified (whether reflected in the terms of the Lender Warrants issued on the Merger Date, or in an amendment to or exchange for the Lender Warrants consummated after the Merger Date) to provide that (i) the exercise period of the Lender Warrants will terminate on the earliest to occur of (x) the date that is ten years after completion of the CHW Business Combination, (y) liquidation of the Company, and (z) redemption of the Lender Warrants as provided in the SPAC Warrant Agreement (the “Lender Warrant Expiration Date”), (ii) Blue Torch has the ability to net exercise the Lender Warrants (based on the fair value of the stock at the time of net exercise, fair value being equal to the public trading price at the time of exercise) on a cashless basis, (iii) Blue Torch received the benefit of certain customary representations and warranties from the Company, and (iv) the Lender Warrants are not required to be registered under the Securities Act.

At the date of issuance, the Company classified the Lender Warrants as equity and recognized them in additional paid-in capital within its consolidated balance sheet. As the Lender Warrants were classified as equity, the Company will not remeasure the Lender Warrants each accounting period. The Company estimated the fair value of warrants exercisable for common stock using the Black-Scholes option valuation model. The Black-Scholes option valuation model inputs are based on the estimated fair value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrant, the risk-free interest rates, the expected dividends, and the expected volatility of the price of the Company’s underlying stock.

As the Lender Warrants were classified as equity, the proceeds were allocated based on the relative fair values of the financial instruments issued as a whole.

Total Debt

As of September 30, 2023, annual scheduled principal payments of debt were as follows:


	Amount
	(in thousands)
2023	$	357
2024	1,751
2025	30,227
Total principal payments	$	32,335

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Business Combination with CHW - Schedule of Reverse Recapitalization (Details) - USD ($) $ in Thousands			9 Months Ended		12 Months Ended
	Nov. 09, 2022	Aug. 09, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Business Combination And Reverse Recapitalization [Abstract]
Cash – CHW’s trust (net of redemptions)					$ 28,330
Cash – PIPE and Backstop Investor		$ 5,000			5,202
Payment of transaction costs and other related expenses					(12,488)
Payment of deferred transaction costs					(9,318)
Proceeds from merger with CHW, net of issuance costs as of the Merger Date			$ 0	$ 11,485	11,726
Reversal of APIC impact recorded upon issuance of Forward Share Purchase Agreements (“FPAs”) in August 2022					(23,203)
Cash received from FPA at Put Date	$ 9,800				9,837
APIC impact of FPA at Put Date, net of cash received					4,229
Proceeds from merger with CHW, net of issuance costs					$ 2,589

Revenues - Schedule of Disaggregation of Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Total revenues	$ 21,800	$ 15,379	$ 62,243	$ 37,829
Services revenue
Disaggregation of Revenue [Line Items]
Total revenues	6,551	5,866	18,159	15,973
Wellness revenue
Disaggregation of Revenue [Line Items]
Total revenues	13,546	9,513	39,426	21,856
Pet food & treats revenue
Disaggregation of Revenue [Line Items]
Total revenues	$ 1,703	$ 0	$ 4,658	$ 0

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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